MUTUAL FUND TRUST
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 34-VISTA
Dear Valued Shareholder:
As you may be aware, The Chase Manhattan Corporation ("Chase") has entered
into an Agreement and Plan of Merger with Chemical Banking Corporation
("Chemical") pursuant to which Chase will merge with and into Chemical (the
"Holding Company Merger"). Pursuant to the Investment Company Act of 1940, as
amended, consummation of the Holding Company Merger will result in the
automatic termination of the investment advisory agreements between the Funds
of Mutual Fund Trust (the "Trust") and The Chase Manhattan Bank, N.A. (the
"Adviser"). In addition, subsequent to the Holding Company Merger, the
Adviser will be merged with and into Chemical Bank in a secondary merger of
the principal operating entities of Chase and Chemical (the "Bank Merger").
The Bank Merger may also be deemed to result in the automatic termination of
the investment advisory agreements between the Adviser and the Funds. In
anticipation of the completion of the Holding Company Merger and the Bank
Merger, and to provide continuity in investment advisory services to your
Fund, we urge you to review the enclosed proxy statement. In the proxy
statement you are asked to vote on the approval of an interim and a new
advisory agreement between your Fund and the Adviser in addition to other
items intended to rationalize the management of the Funds and each Fund's
objectives, policies and restrictions.
In connection with the merger of Chase and Chemical, it has also been
proposed that the series funds of The Hanover Funds, Inc., an open-end
management investment company advised by affiliates of Chemical Bank, be
merged into certain series of the Trust, subject to approval by shareholders
of the Hanover Funds. In an effort to provide continuity of operations and
management, certain Directors of The Hanover Funds, Inc. and The Hanover
Investment Funds, Inc. have been nominated to serve as Trustees of the Trust.
The Board of Trustees has voted unanimously in favor of each proposal and
recommends that you vote "FOR" them as well. You will find more information
on the proposals in the enclosed proxy statement.
Please be assured that there is no increase to the advisory fee rates in the
proposed advisory agreements.
The information below is designed to answer your questions and help you cast
your proxy as a shareholder of the Funds, and is being provided as a
supplement to, not a substitute for, your proxy materials which we urge you
carefully review.
Q. Why are the Proposals being recommended?
A. The Holding Company Merger will affect the administration of the Funds in
two ways. First, mutual funds advised by affiliates of Chemical Bank, The
Hanover Funds, Inc., will be merged into certain Vista Funds, subject to
approval by Hanover shareholders. Second, as required under the Investment
Company Act of 1940, consummation of the Holding Company Merger causes the
automatic termination of the advisory contracts between each Fund and the
Adviser. Therefore, in order to ensure continuity in the management of the
Funds, shareholders are being asked to approve new advisory contracts
between the Funds and the Adviser. Further, the management of the Funds is
also taking this opportunity to modernize, clarify and standardize certain
matters relating to the Funds' operations in an effort to improve
efficiency in the delivery of investment management services to
shareholders of the Vista Funds.
Q. How will the fees and expenses of the Funds be affected?
A. The annual rate of the contractual investment advisory, administrative and
distribution fees applicable to each Vista Fund will not be increased.
Please be assured that there are no increases to the contractual advisory
fees in the proposed advisory agreements.
<PAGE>
Q. Will there be any change in the way the Funds are managed?
A. Vista has built a reputation as one of the mutual fund industry's most
consistent performers. The Funds have no current intention of altering
their investment strategies and the proposals which request approval of
modifications to the Funds' investment objectives, policies and/or
restrictions are not expected to have any immediate effect upon the
management of the Funds.
Q. As a shareholder, what do I need to do?
A. Please read the enclosed proxy statement and vote now by completing,
signing and returning the enclosed proxy ballot form(s) in the prepaid
envelope by March 19, 1996.
YOUR VOTE IS IMPORTANT. Please read the enclosed proxy statement and vote now
by completing, signing and returning the enclosed proxy ballot form(s) in the
pre-paid envelope. If you own shares in more than one Fund, you will receive
a proxy card for each of your Funds. Please vote and return EACH proxy card
you receive. EVERY VOTE COUNTS. If you have any questions, please call the
Vista Service Center at 800-34-VISTA.
Very truly yours,
/s/ Fergus Reid
Fergus Reid
Chairman
<PAGE>
MUTUAL FUND TRUST
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 34-VISTA
Notice of Special Meeting of Shareholders
to be held April 2, 1996
A special meeting of the shareholders of the Funds (each, a "Fund" and
collectively, the "Funds") of MUTUAL FUND TRUST (the "Trust") will be held at
11:00 a.m. (Eastern time) at 101 Park Avenue, 17th Floor, New York, New York
on April 2, 1996, for the purposes indicated below:
The following items apply to shareholders of each Fund:
1. To approve or disapprove an interim investment advisory agreement
between each of the Funds and The Chase Manhattan Bank, N.A. (and the
successor entity thereto) (the "Adviser") which will take effect upon
the merger of The Chase Manhattan Corporation (the parent company of the
Adviser) and Chemical Banking Corporation (to be voted on separately by
the Shareholders of each Fund). No fee increase is proposed.
2. To elect eleven trustees to serve as members of the Board of Trustees of
the Trust.
3. To ratify the selection of Price Waterhouse LLP as independent
accountants for the 1996 fiscal year of each of the Funds.
4. To approve or disapprove an amendment to the Trust's Declaration of
Trust.
In addition, for shareholders of all Funds, to transact such other business
as may properly come before the meeting or any adjournment thereof.
The remaining Proposals apply only to the Class of Shares or Fund indicated
in italics:
5. To consider the following proposals pertaining primarily to each Fund's
fundamental investment restrictions:
a. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning borrowing;
b. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning investment for the purpose of
exercising control;
c. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning the making of loans;
d. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning purchases of securities on margin;
e. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning concentration of investment;
f. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning commodities and real estate;
g. To approve or disapprove an amendment to each Fund's fundamental
investment restriction regarding investments in restricted and
illiquid securities;
h. To approve or disapprove of a reclassification, as nonfundamental, of
each Fund's fundamental restriction concerning the use of options;
i. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning senior securities;
j. To approve or disapprove an amendment to each Fund's fundamental
investment restriction regarding short sales of securities.
k. To approve or disapprove a proposal to adopt a new investment policy
that authorizes each Fund to invest all of its investable assets in
another open-end investment company having substantially the same
investment objective and policies as the Fund.
<PAGE>
Proposal 51 relates to the Vista California Intermediate Tax Free Fund only:
l. To approve or disapprove a change in the status of the Fund from a
diversified fund to a nondiversified fund.
With respect to all Funds other than Vista California Intermediate Tax Free
Fund, Vista New York Tax Free Income Fund and Vista Tax Free Income Fund:
6. To approve or disapprove a restatement of the investment objectives of
certain Funds.
With respect to the Class A shares of Vista Tax Free Income Fund, Vista New
York Tax Free Income Fund and Vista California Intermediate Tax Free Income
Fund only:
7. To approve or disapprove an amendment to the Class A Shares Rule 12b-1
Distribution Plan.
With respect to all Funds other than Vista Tax Free Money Market Fund and
Vista Global Money Market Fund:
8. To approve or disapprove a new investment advisory agreement between
each of the Funds and the Adviser, and a sub-advisory agreement between
the Adviser and Chase Asset Management, Inc. with respect to each of the
above-referenced Funds, to take effect as soon as practicable after
approval by shareholders (to be voted on separately by shareholders of
each Fund). No fee increase is proposed.
With respect to the Vista Tax Free Money Market Fund and Vista Global Money
Market Fund only:
9. To approve or disapprove a new investment advisory agreement between
each of the Funds and the Adviser (to take effect as soon as
practicable after the approval by shareholders), and a sub-advisory
agreement between the Adviser and Texas Commerce Bank, National
Association (to take effect upon the merger of certain series of The
Hanover Funds, Inc. into the Funds) with respect to each of the
above-referenced Funds (to be voted on separately by shareholders of
each Fund). No fee increase is proposed.
Shareholders of record as of the close of business on January 22, 1996 are
entitled to receive notice of, and to vote at, the Meeting and any and all
adjournments thereof. Your attention is called to the accompanying proxy
statement.
By Order of the Board of Trustees
/s/ Ann Bergin
Ann Bergin
Secretary
February 12, 1996
You can help avoid the necessity and expense of sending follow-up letters to
ensure a quorum by promptly returning the enclosed proxy. If you are unable
to attend the Meeting, please mark, sign, date and return the enclosed proxy
so that the necessary quorum may be represented at the meeting. The enclosed
envelope requires no postage if mailed in the United States.
<PAGE>
MUTUAL FUND TRUST
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 34-VISTA
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees of MUTUAL
FUND TRUST (the "Trust") and pertains, to the extent set forth below, to each
of its underlying investment funds (each, a "Fund" and collectively, the
"Funds"). The Trust is a registered open-end investment company having its
executive offices at 125 West 55th Street, New York, New York 10019. The
proxy is revocable at any time before it is voted by sending written notice
of the revocation to the Trust or by appearing personally at the April 2,
1996 special meeting of shareholders (the "Meeting"). The cost of preparing
and mailing the notice of meeting, the proxy card, this proxy statement and
any additional proxy material insofar as it relates to the approval of
various Advisory Agreements has been or is to be borne by The Chase Manhattan
Corporation, Chemical Banking Corporation and/or their affiliates. Insofar as
such expenses relate to those portions of the Proxy Statement concerning the
amendment to the Trust's Declaration of Trust, election of Trustees,
ratification of independent accountants, and the proposed changes to each
Fund's investment objectives and policies, it is expected that the Trust or
the relevant Fund will pay all or a portion of such expenses. The Chase
Manhattan Bank, N.A. (the "Adviser") is currently the investment adviser to
each of the Funds. Proxy solicitations will be made primarily by mail, but
may also be made by telephone, telegraph, facsimile or personal interview
conducted by certain officers or employees of the Trust, the Adviser or its
affiliates, or, if necessary, a commercial firm retained for this purpose. In
the event that the shareholder signs and returns the proxy ballot, but does
not indicate a choice as to any of the items on the proxy ballot, the proxy
attorneys will vote those shares in favor of such proposal(s), including for
the election of each person nominated to the Board of Trustees of the Trust.
On January 22, 1996, the record date for determining shareholders entitled to
receive notice of and vote at the Meeting (the "Record Date"), the Funds had
the number of shares of beneficial interest ("Shares") outstanding set forth
below, each Share being entitled to one vote:
<TABLE>
<CAPTION>
Total Class A Total
Shares Shares
Fund Outstanding Outstandiing
- -----------------------------------------------------------------------------
<S> <C> <C>
Vista Treasury Plus Money Market Fund None 132,288,689.440
Vista Federal Money Market Fund None 542,676,072.770
Vista New York Tax Free Money Market Fund None 511,736,185.676
Vista Tax Free Money Market Fund None 505,537,701.430
Vista California Tax Free Money Market Fund None 37,153,390.220
Vista U.S. Government Money Market Fund None 2,471,608,475.274
Vista Global Money Market Fund None 839,202,809.090
Vista Prime Money Market Fund None 1,376,437,287.135
Vista California Intermediate Tax Free Fund 3,208,188.056 3,208,188.056
Vista New York Tax Free Income Fund 9,050,198.859 10,157,952.420
Vista Tax Free Income Fund 6,989,732.296 8,227,181.522
</TABLE>
Shares which represent interests in a particular Fund of the Trust vote
separately on matters which pertain only to that Fund. Similarly, shares
which represent interests in a particular class of a Fund vote separately on
matters which pertain only to that class of such Fund. All of the proposals
(except the election of Trustees and the amendment to the Declaration of
Trust) will be voted on separately by the shareholders of each Fund. In
addition, specific classes of shares of a Fund will vote separately as a
class with respect to any matter affecting only the arrangements relating to
that specific class (Proposal 7). Any other business which may properly come
before the meeting will be voted separately by shares of each Fund (or class
of each Fund, as necessary). The holders of each share of the Trust shall be
entitled to one vote for each full share and a fractional vote for each
fractional share.
For purposes of determining the presence of a quorum and counting votes on
the matters presented, Shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast, at the Meeting.
Under the Investment Company Act of 1940, as amended (the "1940 Act"), the
affirmative vote necessary to approve
<PAGE>
a matter under consideration may be determined with reference to a percentage
of votes present at the Meeting, which would have the effect of treating
abstentions and non-votes as if they were votes against the proposal.
A copy of each Fund's Annual Report (which contains information pertaining to
the Fund) may be obtained, without charge, by calling the Vista Service
Center, at (800) 34-VISTA.
This proxy statement and the enclosed notice of meeting and proxy card are
first being mailed to shareholders on or about February 12, 1996.
INTRODUCTION
The Meeting is being called for the following purposes.
With respect to each of the Funds: (1) to approve or disapprove an interim
investment advisory agreement (the "Interim Agreement") between each of the
Funds and the Adviser which will take effect upon the merger of The Chase
Manhattan Corporation and Chemical Banking Corporation; (2) to elect eleven
trustees to serve as members of the Board of Trustees of the Trust; (3) to
ratify the selection of Price Waterhouse LLP as independent accountants for
the 1996 fiscal year of each of the Funds; (4) to approve or disapprove an
amendment to the Trust's Declaration of Trust; and to transact such other
business as may properly come before the Meeting or any adjourn- ment
thereof.
Each of the following Proposals apply only to certain Funds or classes of
shares of a particular Fund (the Funds or classes of shares to which each of
the Proposals apply are specified below and on the charts set forth on the
next page); (5) to approve or disapprove amendments to each Fund's
fundamental investment restrictions (all Funds except as noted); (6) to
approve or disapprove a restatement of the investment objectives of certain
Funds (all Funds other than Vista California Intermediate Tax Free Fund,
Vista New York Tax Free Income Fund and Vista Tax Free Income Fund); (7) to
approve or disapprove an amendment to the Class A Shares Rule 12b-1
Distribution Plan (Vista Tax Free Income Fund, Vista New York Tax Free Fund
and Vista California Tax Free Income Fund only); (8) to approve or disapprove
a new investment advisory agreement (the "Proposed Agreement") between each
of the Funds and the Adviser (and its successor in the Bank Merger), and a
sub-advisory agreement between the Adviser and Chase Asset Management, Inc.
to take effect as soon as practicable after approval by shareholders (all
Funds other than Vista Tax Free Money Market Fund and Vista Global Money
Market Fund); and (9) to approve or disapprove a new investment advisory
agreement between each of the Funds and the Adviser (and its successor in the
Bank Merger) (to take effect as soon as practicable after approval by
shareholders), and a sub-advisory agreement between the Adviser (and its
successor in the Bank Merger) and Texas Commerce Bank, National Association
(to take effect upon the merger of certain series of The Hanover Funds, Inc.
into the Funds) (Vista Tax Free Money Market Fund and Vista Global Money
Market Fund only).
2
<PAGE>
PROPOSAL NUMBER
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
NAME OF FUND 1 2 3 4 5(1) 6 7(2) 8 9
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Vista Treasury Plus Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista Federal Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista New York Tax Free Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista Tax Free Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista California Tax Free Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista U.S. Government Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista Global Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista Prime Money Market Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista California Immediate Tax Free Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista New York Tax Free Income Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
Vista Tax Free Income Fund x x x x x x x
- --------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) See subschart below for Proposals 5a-k.
(2) Class A shares only.
SUBCHART FOR PROPOSALS 5a-l
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NAME OF FUND a b c d e f g h i j k l
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Vista Treasury Plus Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista Federal Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista New York Tax Free Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista Tax Free Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista California Tax Free Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista U.S. Government Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista Global Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista Prime Money Market Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista California Immediate Tax Free Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista New York Tax Free Income Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
Vista Tax Free Income Fund x x x x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Approval of each one of the Proposals other than the election of trustees
(Proposal 2), the ratification of accountants (Proposal 3) and the approval
of an amendment to the Declaration of Trust (Proposal 4) requires the vote of
a "majority of the outstanding voting securities," within the meaning of the
1940 Act, of each Fund to which the proposal is applicable. The term
"majority of the outstanding voting securities" is defined under the 1940 Act
to mean: (a) 67% or more of the outstanding Shares present at the Meeting, if
the holders of more than 50% of the outstanding Shares are present or
represented by proxy, or (b) more than 50% of the outstanding Shares of the
Fund, whichever is less. The election of each nominee for election as a
trustee (Proposal 2) and the approval of an amendment to the Declaration of
Trust (Proposal 4) requires the affirmative vote of a majority of all Shares
of the Trust voted at the Meeting, and the ratification of accountants
(Proposal 4) requires the vote of a majority of the Shares of each Fund
present at the Meeting.
An election of Trustees under Proposal 2, an approval of accountants under
Proposal 3 and the approval of an amendment to the Declaration of Trust
(Proposal 4) would be effective immediately. If Proposal 1 is approved, it is
anticipated that the Interim Advisory Agreement will become effective upon
the occurrence of the Holding Company Merger (and remain effective after the
Bank Merger). If Proposals 5, 6, and 7 are approved, it is anticipated that
the changes effected thereby will become effective as soon as practicable
after shareholder approval. If Proposal 8 is approved, it is anticipated that
the new Advisory Agreement and the CAM, Inc. Agreement will become effective
as soon as practicable after approval by shareholders (and remain effective
after the Bank Merger). If Proposal 9 is approved, it is anticipated that the
new Advisory Agreement will become effective as soon as practicable after
approval by shareholders (and remain effective after the Bank Merger) and the
Sub-Advisory Agreement will become effective upon the merger of certain
series of The Hanover Funds, Inc. into the Funds (and remain effective after
the Bank Merger).
3
<PAGE>
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF AN INTERIM INVESTMENT
ADVISORY AGREEMENT BETWEEN EACH FUND
AND THE CHASE MANHATTAN BANK, N.A. (AND THE
SUCCESSOR ENTITY THERETO)
INTRODUCTION
The Chase Manhattan Bank, N.A. currently serves as each Fund's investment
adviser pursuant to a separate Investment Advisory Agreement (the "Current
Advisory Agreement") for each Fund. The Chase Manhattan Bank, N.A. is a
wholly-owned subsidiary of The Chase Manhattan Corporation, a registered bank
holding company.
On August 27, 1995, The Chase Manhattan Corporation announced its entry into
an Agreement and Plan of Merger (the "Merger Agreement") with Chemical
Banking Corporation ("Chemical"), a bank holding company, pursuant to which
The Chase Manhattan Corporation will merge with and into Chemical (the
"Holding Company Merger"). Under the terms of the Merger Agreement, Chemical
will be the surviving corporation in the Holding Company Merger and will
continue its corporate existence under Delaware law under the name "The Chase
Manhattan Corporation" ("New Chase"). The board of trustees and shareholders
of each holding company have approved the Holding Company Merger, which will
create the largest bank holding company in the United States based on assets.
The consummation of the Holding Company Merger is subject to certain closing
conditions. The Holding Company Merger is expected to be completed during the
first quarter of 1996.
Subsequent to the Holding Company Merger, it is expected that the adviser to
the Funds, The Chase Manhattan Bank, N.A., will be merged with and into
Chemical Bank, a New York State chartered bank ("Chemical Bank") (the "Bank
Merger" and together with the Holding Company Merger, the "Mergers"). The
surviving bank will continue operations under the name The Chase Manhattan
Bank (as used herein, the term "Chase" refers to The Chase Manhattan Bank,
N.A. and its successor in the Bank Merger, and the term "Adviser" means Chase
(including its successor in the Bank Merger) in its capacity as investment
adviser to the Funds). The consummation of the Bank Merger is subject to
certain closing conditions, including the receipt of certain regulatory
approvals. The Bank Merger is expected to be completed on or about July 31,
1996.
Chemical is a publicly owned bank holding company incorporated under Delaware
law and registered under the Federal Bank Holding Company Act of 1956, as
amended. As of December 31, 1995, through its direct or indirect
subsidiaries, Chemical managed more than $57 billion in assets, including
approximately $6.9 billion in mutual fund assets in 11 mutual fund
portfolios. Chemical Bank is a wholly-owned subsidiary of Chemical and is a
New York State chartered bank.
As required by the 1940 Act, the Current Advisory Agreement provides for its
automatic termination upon its "assignment" (as defined in the 1940 Act).
Consummation of the Holding Company Merger may be deemed to result in an
assignment of the Current Advisory Agreement and, consequently, to terminate
the Current Advisory Agreement in accordance with its terms. Similarly, the
consummation of the Bank Merger may also be deemed to result in an assignment
and consequently terminate the then-existing investment advisory contract. In
anticipation of the consummation of the Mergers and to provide continuity in
investment advisory services, at a meeting held on December 14, 1995, the
Trust's Board, including a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Investment Adviser,
approved the Interim Advisory Agreement between the Trust, on behalf of each
Fund, and the Adviser to take effect upon the consummation of the Holding
Company Merger. The Board also directed that such agreement be submitted to
shareholders for approval at this meeting. In addition, the Board of Trustees
approved the continuation of such agreement after the Bank Merger, on the
same terms and conditions as in effect immediately prior to the merger
(except for effective and termination dates) in the event the Interim
Advisory Agreement is deemed to terminate as a result of the Bank Merger.
Approval of Proposal 1 will also be deemed approval of such continuation of
the Interim Advisory Agreement after the Bank Merger. EACH INTERIM ADVISORY
AGREEMENT IS IDENTICAL TO THE CURRENT ADVISORY AGREEMENT, EXCEPT FOR ITS
EFFECTIVE AND TERMINATION DATES. FOR EACH FUND, THE AGGREGATE CONTRACTUAL
RATE CHARGEABLE FOR INVESTMENT ADVISORY SERVICES WILL REMAIN THE SAME.
In connection with each Fund's approval of the Interim Advisory Agreement,
the Board considered that the terms of the Mergers do not require any change
in the Adviser's investment management or operation of the Funds, or the
shareholder services or other business activities of the Funds. Chemical and
the Adviser have informed the Board of Trustees that the Mergers will not at
this time result in any such change, although no assurance can be given that
such a change will not occur. Each also has advised that, at present, neither
plans nor proposes to make any material changes in the business, corporate
structure or composition of senior management or personnel of the Adviser, or
in the manner in which the Adviser renders investment advisory services to
each. If, after the Mergers, changes in the Adviser are proposed that might
materially affect its services to a Fund, the Board will consider the effect
of those changes and take such action as it deems advisable under the
circumstances.
The Adviser has informed the Trust that it proposes to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non- exclusive safe harbor
for an investment adviser or any of its affiliated persons to receive any
amount or benefit in connection with a change in control of the investment
adviser as long as two conditions are met. First, for a period of three years
after the transaction, at least 75% of the Board members of the investment
company must not be interested persons of such investment adviser. Second, an
"unfair burden" must not be imposed on the investment company as a result of
such transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
transaction whereby the investment adviser, or any interested person of any
such adviser, receives or is entitled to receive any compensation, directly
or indirectly, from the investment company or its security holders (other
than fees for bona fide investment advisory or other services) or, with
certain exceptions, from any person in connection with the
4
<PAGE>
purchase or sale of securities or other property to, from or on behalf of the
investment company. The Adviser, after due inquiry, is not aware of any
express or implied term, condition, arrangement or understanding which would
impose an "unfair burden" on the Trust as a result of the Mergers. New Chase,
the Adviser and their affiliates have agreed to take no action that would
have the effect of imposing an "unfair burden" on the Trust as a result of
the Mergers. Chase, Chemical and/or one or more of their affiliates have
undertaken to pay all costs relating to the Mergers, including the costs of
the shareholders' meetings.
THE INVESTMENT ADVISER
The Advisory Agreements. The Chase Manhattan Bank, N.A., One Chase Manhattan
Plaza, New York, New York 10081, currently serves as investment adviser to
the Funds pursuant to an investment advisory agreement between the Adviser
and the Trust on behalf of each Fund (the "Current Advisory Agreement"). The
Adviser will serve as investment adviser to the Funds after the Holding
Company Merger under an investment advisory agreement with the Trust on
behalf of each Fund (the "Interim Advisory Agreement") which is identical in
all material respects to the Current Advisory Agreement except for its
effective and termination dates. A copy of the form of the Interim Advisory
Agreement is attached hereto as Appendix A and should be read in conjunction
with the following.
The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A., a wholly-owned
subsidiary of The Chase Manhattan Corporation, a registered bank holding
company, is a commercial bank offering a wide range of banking and investment
services to customers throughout the United States and around the world. Its
headquarters are at One Chase Manhattan Plaza, New York, New York 10081. As
of December 31, 1995, Chase was one of the largest commercial banks in the
United States, with assets of $100.2 billion. As of such date, The Chase
Manhattan Corporation was one of the largest bank holding companies in the
United States, having total assets of approximately $121.2 billion. As of
September 30, 1995, The Chase Manhattan Corporation through various
subsidiaries provided personal, corporate and institutional investment
management services for more than $55 billion in assets, of which Chase
provided investment management services to portfolios containing
approximately $10.4 billion in assets. Included among Chase's accounts are
commingled trust funds and a broad spectrum of individual trust and
investment management portfolios. These accounts have varying investment
objectives. Effective upon consummation of the Holding Company Merger, The
Chase Manhattan Bank, N.A. will be a wholly-owned subsidiary of New Chase.
Upon consummation of the Bank Merger, The Chase Manhattan Bank, a New York
State chartered bank (the successor entity to The Chase Manhattan Bank, N.A.)
will continue to be a wholly- owned subsidiary of New Chase.
The other mutual funds for which the Adviser also serves as investment
adviser, their assets as of December 31, 1995, and their advisory fees are:
<TABLE>
<CAPTION>
Total Assets
as of 12/31/95
Mutual Fund Group Fee (In Millions)
- ---------------------------------------------------------------
<S> <C> <C>
Vista Short Term Bond Fund 0.25% $ 36.493
Vista U.S. Government
Income Fund 0.30 114.170
Vista Bond Fund 0.30 59.191
Vista Equity Income Fund 0.40% $ 11.564
Vista Equity Fund 0.40 49.847
Vista Balanced Fund 0.50 41.393
IEEE Balanced Fund 0.65 11.459
Vista Small Cap Equity Fund 0.65 80.898
Vista Southeast Asian Fund 1.00 4.724
Vista Japan Fund 1.00 3.620
Vista European Fund 1.00 4.518
</TABLE>
<TABLE>
<CAPTION>
Total Assets
as of 12/31/95
Portfolios Fee (In Millions)
- ---------------------------------------------------------------
<S> <C> <C>
Vista International Equity
Portfolio 1.00% $ 33.361
Vista Capital Growth Portfolio 0.40 994.268
Vista Growth and Income Portfolio 0.40 1,842.903
Vista Global Fixed Income Portfolio 0.75 2.837
</TABLE>
<TABLE>
<CAPTION>
Total Assets
as of 12/31/95
Mutual Fund Variable Annuity Trust Fee (In Millions)
- ---------------------------------------------------------------
<S> <C> <C>
International Equity Porfolio 0.80% $2.375
Capital Growth Portfolio 0.60 4.273
Growth and Income Portfolio 0.60 3.680
Asset Allocation Portfolio 0.55 2.566
U.S. Treasury Income Portfolio 0.50 2.320
Money Market Portfolio 0.25 2.292
</TABLE>
The Adviser is currently a wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, and is a commercial bank
offering a wide range of banking and investment services to customers
throughout the U.S. and around the world. Effective upon consummation of the
Holding Company Merger, the Adviser will be a wholly-owned subsidiary of New
Chase. Upon consummation of the Bank Merger, the Adviser will continue to be
a wholly-owned subsidiary of New Chase.
The principal executive officers and Directors of the Adviser are as follows:
Thomas G. Labreque, Chairman of the Board, Chief Executive Officer and
Director.
Richard J. Boyle, Vice Chairman of the Board and Director.
Donald L. Boudreau, Vice Chairman of the Board and Director.
E. Michel Kruse, Vice Chairman of the Board and Director.
Susan V. Berresford, Director. Ms. Berresford is also an Executive Vice
President of The Ford Foundation.
M. Anthony Burns, Director. Mr. Burns is also Chairman of the Board,
President and Chief Executive Officer of Ryder System, Inc.
James L. Ferguson, Director. Mr. Ferguson is also a retired Chairman and
Chief Executive Officer of General Foods Corporation.
H. Laurance Fuller, Director. Mr. Fuller is also Chairman and Chief Executive
Officer of Amoco Corporation.
William H. Gray, III, Director. Mr. Gray is also President and Chief
Executive Officer of the United Negro College Fund, Inc.
David T. Kearns, Director. Mr. Kearns is also a retired Chairman and Chief
Executive Officer of The Xerox Corporation.
5
<PAGE>
Delano E. Lewis, Director. Mr. Lewis is also the President and Chief
Executive Officer of National Public Radio.
Paul W. MacAvoy, Director. Mr. MacAvoy is also the Williams Brothers
Professor of Management Studies at the Yale School of Management.
John H. McArthur, Director. Mr. McArthur is also a Professor of the Harvard
Graduate School of Business Administration.
David T. McLaughlin, Director. Mr. McLaughlin is also Chairman of the Board
and Chief Executive Officer of The Aspen Institute.
Edmund T. Pratt, Jr., Director. Mr. Pratt is also Chairman Emeritus of Pfizer
Inc.
Henry B. Schacht, Director. Mr. Schacht is also a Member of the Board of
Directors of Cummins Engine Company, Inc.
Donald H. Trautlein, Director. Mr. Trautlein is also a retired Chairman and
Chief Executive Officer of Bethlehem Steel Corporation.
The business address of the above persons is One Chase Manhattan Plaza, New
York, New York 10081.
CURRENT AND INTERIM ADVISORY
AGREEMENTS
The Current and Interim Advisory Agreements for each Fund are identical,
except for their effective dates. The Current and Interim Advisory Agreements
provide for the Adviser to render investment, supervisory and certain
corporate administrative services subject to the control of the Board of
Trustees. The Current and Interim Advisory Agreements state that the Adviser
shall, at its expense, provide to the particular Fund all office space and
facilities, equipment and clerical personnel necessary to carry out its
duties under each Advisory Agreement.
Under each of the Current and Interim Advisory Agreements, the Adviser pays
all compensation of those officers and employees of the Trust and of those
Trustees who are affiliated with the Adviser. Each Fund bears the cost of the
preparation and setting in type of its prospectuses and reports to
shareholders and the costs of printing and distributing those copies of such
prospectuses and reports as are sent to shareholders. Under the Current and
Interim Advisory Agreements all other expenses of the Fund not expressly
assumed by the Adviser are paid by the Fund. Each Advisory Agreement lists
examples of such expenses; the major categories of such expenses relate to
interest, taxes, legal and audit expenses, custodian and transfer agent or
shareholder servicing agency expenses, stock issuance and redemption costs,
certain printing costs, registration costs of the Trust and its shares under
federal and state securities laws, and non-recurring expenses, including
litigation.
For the services it provides under the terms of each Current and Interim
Advisory Agreement, each Fund pays the Adviser a monthly fee equal to a
specified percentage per annum of its average daily net assets computed at
the close of each business day. See "Fees and Fee Waivers" below which sets
forth the applicable percentage for each Fund. The Adviser may voluntarily
agree to waive a portion of the fees payable to it.
The Current Advisory Agreements are currently in effect until April 15, 1996
with respect to Vista Treasury Plus Money Market Fund and Vista Federal Money
Market Fund and August 23, 1996 with respect to all other Funds; the Current
Advisory Agreements continue from year to year thereafter, provided that the
Agreement is specifically approved in a manner consistent with the 1940 Act.
However, the Current Advisory Agreements may be deemed to terminate upon
consummation of the Holding Company Merger. The 1940 Act requires approval at
least annually by the Board of Trustees, including the vote of a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act) of
any party to the Agreement cast in person at a meeting called for the purpose
of voting on approval, or by the vote of the holders of a "majority" of the
outstanding voting securities (as defined in the 1940 Act) of the Fund. The
Interim Agreement will terminate on May 30, 1996 with respect to each Fund
unless the applicable Fund's shareholders approve the Interim Agreement prior
to such scheduled termination date (see "Additional Information").
The Trust, on behalf of each Fund, may terminate each of the Current and
Interim Advisory Agreements without penalty on not more than 60 days' nor
less than 30 days' written notice when authorized by either a vote of the
shareholders of the Fund or by a vote of a majority of the Trust's Board of
Trustees, including the vote of a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to the
Agreement. The Adviser may terminate each of the Current and Interim Advisory
Agreements on not more than 60 days' nor less than 30 days' written notice.
Both Advisory Agreements will automatically terminate in the event of their
assignment (as defined in the 1940 Act).
In addition, each of the Current and Interim Advisory Agreements provides
that, in the event the operating expenses of the Fund, including all
investment advisory and administration fees, but excluding brokerage
commissions and fees, distribution fees, taxes, interest and extraordinary
expenses such as litigation expenses, for any fiscal year exceed the most
restrictive expense limitation applicable to the Fund imposed by the
securities laws or regulations thereunder of any state in which the shares of
the Fund are qualified for sale, as such limitations may be raised or lowered
from time to time, the Adviser shall reduce its advisory fee described above
to the extent of its share of such excess expenses. The amount of any such
reduction to be borne by the Adviser will be deducted from the monthly fee
otherwise payable to the Adviser during such fiscal year; and if such amounts
should exceed the monthly fee, the Adviser will pay to the Fund its share of
such excess expenses no later than the last day of the first month of the
next succeeding fiscal year.
Certain Relationships and Activities. The Adviser and its affiliates may have
deposit, loan and other commercial banking relationships with the issuers of
securities purchased on behalf of any of the Funds, including outstanding
loans to such issuers which may be repaid in whole or in part with the
proceeds of securities so purchased. The Adviser and its affiliates deal,
trade and invest for their own accounts in U.S. Government obligations and
municipal obligations and are among the leading dealers of various types of
U.S. Government obligations and municipal obligations. The Adviser and its
affiliates may sell U.S. Government obligations and municipal obligations to
and purchase them from other investment companies distributed by Vista Broker
Dealer Services. The Adviser will not invest any Fund assets in any U.S.
Government obligations or municipal obligations purchased from itself or any
affiliate, although under certain circumstances such securities may be
purchased from other members of an underwriting syndicate in which the
Adviser or an affiliate is a non-principal member. This restriction may limit
the amount or type of U.S. Government obligations or municipal obligations
available to be purchased on behalf of the Funds. The Adviser has informed
the Fund that in
6
<PAGE>
making its investment decisions it does not obtain or use material inside
information in the possession of any other division or department of the
Adviser or in the possession of any affiliate of the Adviser.
Both the Current and Interim Advisory Agreements provide that, in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard for
its obligations thereunder, the Adviser shall not be liable for any act or
omission in the course of or in connection with the rendering of its services
thereunder.
BOARD CONSIDERATION
In considering whether to approve the Interim Advisory Agreement and to
submit it to the shareholders for their approval, the Board of Trustees
considered the following factors: (1) the representation that there would be
no diminution in the scope and quality of advisory and other services
provided by the Adviser under the Interim Advisory Agreement, and (2) the
identical nature of the terms and conditions, including compensation payable,
contained in the Interim Advisory Agreement as compared to the Current
Advisory Agreement. Additionally, the Board considered the benefits that
would be obtained by each Fund in maintaining continuity in the advisory
services provided to it, and determined that continuity was advantageous to
the Fund as it would serve to minimize uncertainty and confusion, provide for
the continued utilization of the demonstrated skills and capability of the
staff of the Adviser and its familiarity with the operations of the Trust,
and avoid the possibility of disruptive effects on the Trust that might
otherwise result from a change in the management and operations of the Trust.
ADDITIONAL INFORMATION
Chase also serves as each Fund's administrator pursuant to a separate
Administration Agreement. Under the Administration Agreement, Chase generally
assists in all aspects of the Fund's operations, other than providing
investment advice, subject to the overall authority of the Board of Trustees
in accordance with applicable state law. Under the terms of the relevant
Administration Agreement, Chase receives a monthly fee at the annual rate of
0.10% of the value of each Fund's average daily net assets. For each Fund,
the administration fee payable, the amount by which such fee was reduced
pursuant to a waiver by Chase, and the net administration fees paid by the
Fund under the Administration Agreement for the indicated period are set
forth below under "Fees and Fee Waivers."
The Funds have engaged Vista Broker-Dealer Services, Inc. (the
"Sub-Administrator"), a wholly-owned subsidiary of BISYS Fund Services, Inc.,
located at 125 West 55th Street, New York, New York 10019, to assist in
providing certain administrative services for each Fund pursuant to a
Sub-Administration Agreement between the Trust, on behalf of each Fund, and
the Sub- Administrator. The Sub-Administrator receives an annual fee, payable
monthly, of 0.05% of the average daily net assets of each Fund.
On November 6, 1995, the Trust, other investment companies advised by Chase,
and Chase filed an application (the "Application") with the Securities and
Exchange Commission (the "Commission") requesting an order of the Commission
permitting implementation, without prior shareholder approval, of the Interim
Advisory Agreements during the interim period commencing on the date of the
closing of the Holding Company Merger and ending at the earlier of such time
as sufficient votes are cast by the applicable Fund's shareholders to approve
the relevant Interim Agreement or May 30, 1996 (the "Interim Period").
As a condition to the requested exemptive relief, the Trust has undertaken in
the Application that the advisory compensation payable by any Fund during the
Interim Period will be maintained in an interest-bearing escrow account and,
with respect to each Fund, amounts in the account will be paid to Chase only
upon approval by the shareholders of the Fund of the Interim Advisory
Agreement and the compensation payable thereunder. In addition, the
Application contains representations that Chase (and its successor, if
applicable), will take all appropriate steps to ensure that the scope and
quality of its advisory and other services provided to the Funds during the
Interim Period will be at least equivalent to the scope and quality of the
services previously provided; and that, in the event of any material change
in the personnel providing services pursuant to the Interim Advisory
Agreements during the Interim Period, the Board of Trustees will be apprised
and consulted to assure that they are satisfied that the services provided
will not be diminished in scope or quality.
The Trust's Board of Trustees concluded that payment of the investment
advisory fee under the Interim Advisory Agreement, during the Interim Period
would be appropriate and fair considering that (1) the fee would be paid at
the same rate as was previously in effect under the Current Advisory
Agreement and services would be provided in the same manner, (2) because of
the relatively short time frame necessary to complete the Holding Company
Merger, there was a possibility that some or all of the Funds would not
obtain the requisite number of votes to approve the Interim Advisory
Agreement prior to the Holding Company Merger, and (3) the non-payment of
advisory fees during the Interim Period would be an unduly harsh result in
view of the services provided to each Fund under the Interim Advisory
Agreements.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of its Interim Advisory Agreement will require the affirmative vote
of a "majority of the outstanding voting securities" of the relevant Fund,
which for this purpose means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of such Fund or (2) 67% or more of the
shares of such Fund present at the meeting if more than 50% of the
outstanding shares of such Fund are represented at the meeting in person or
by proxy (a "Majority Vote"). If the shareholders of a Fund do not approve
the Interim Advisory Agreement, the consummation of the Holding Company
Merger will not be affected, the Current Advisory Agreement for that Fund
will have terminated or will terminate upon the consummation of the Holding
Company Merger and the Interim Advisory Agreement for that Fund will
terminate on May 30, 1996. In that event, if the shareholders shall not have
approved new advisory arrangements in accordance with Proposals 8 and 9, the
Board will take such further action as it may deem to be in the best
interests of the Fund's shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
7
<PAGE>
ROPOSAL 2
ELECTION OF TRUSTEES
It is proposed that shareholders of the Funds consider the election of the
individuals listed below (the "Nominees") to the Board of Trustees of the
Trust, which is currently organized as a Massachusetts business trust.
Biographical information about the Nominees and other relevant information is
set forth below. Each Nominee has consented to being named in this Proxy
Statement and has agreed to serve as a Trustee if elected.
In connection with the Mergers, it has been proposed, subject to shareholder
approval, that the series funds of The Hanover Funds, Inc., an open-end
management investment company affiliated with Chemical Bank (the "Hanover
Funds"), be merged into certain series of the Trust. In an effort to provide
continuity of operations and management, certain Directors of The Hanover
Funds, Inc. and The Hanover Investment Funds, Inc. have been nominated to
serve as Trustees of the Trust. Therefore, the Nominees consist of all
current Trustees of the Trust and three other individuals who are presently
Directors of The Hanover Funds, Inc.
The persons named in the accompanying form of proxy intend to vote each such
proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for
elections to office. It is not contemplated that any Nominee will be unable
to serve as a Board member for any reason, but if that should occur prior to
the Meeting, the proxy holders reserve the right to substitute another person
or persons of their choice as nominee or nominees.
The following are the Nominees:
<TABLE>
<CAPTION>
Years First
Principal Occupations Became
Nominee Age for the Last Five Years a Trustee
- ------- --- ----------------------- -----------
<S> <C> <C> <C>
Fergus Reid, III 63 Chairman and Chief Executive Officer, Lumelite Corporation, since 1984
971 West Road September 1985; Trustee, Morgan Stanley Funds; from January 1985
New Canaan, CT 06840 through September 1985, Director of Corporate Finance, Noyes
Partners (investment advisory firm); from 1982 through 1984,
Managing Director, Bernhard Associates (venture capital firm).
Richard E. Ten Haken 61 Former District Superintendent of Schools, Monroe No. 2 and 1984
4 Barnfield Road Orleans Counties, New York; Chairman of the Finance and the Audit
Pittsford, NY 14534 and Accounting Committees, Member of the Executive Committee;
Chairman of the Board and President, New York State Teachers'
Retirement System.
William J. Armstrong 54 Vice President and Treasurer, Ingersoll-Rand Company. 1987
49 Aspen Way
Upper Saddle River, NJ
07458
John R.H. Blum 66 Attorney in private practice; formerly partner in the law firm of 1984
322 Main Street Richards, O'Neil & Allegaert; Commissioner of Agriculture-State of
Lakeville, CT 06039 Connecticut, 1992-1995.
*Joseph J. Harkins 64 Retired; formerly Commercial Sector Executive and Executive Vice 1990
257 Plantation Circle South President of The Chase Manhattan Bank, N.A. from 1985 through
Ponte Vedra Beach, FL 32082 1989. He had been employed by Chase in numerous capacities and
offices since 1954. Director of Blessings Corporation, Jefferson
Insurance Company of New York, Monticello Insurance Company and
Nationar.
*H. Richard Vartabedian 60 Consultant, Republic Bank of New York; formerly, Senior Investment 1992
P.O. Box 296 Officer, Division Executive of the Investment Management Division
Beach Road, Hendrick's Head of The Chase Manhattan Bank, N.A., 1980 through 1991.
Southport, ME 04576
Stuart W. Cragin, Jr. 63 Retired; formerly President, Fairfield Testing Laboratory, Inc. He 1992
108 Valley Road has previously served in a variety of marketing, manufacturing and
Cos Cob, CT 06807 general management positions with Union Camp Corp., Trinity Paper
& Plastics Corp., and Conover Industries.
Irving L. Thode 64 Retired; Vice President of Quotron Systems. He has previously 1992
80 Perkins Road served in a number of executive positions with Control Data Corp.,
Greenwich, CT 06830 including President of its Latin American Operations, and General
Manager of its Data Services business.
*W. Perry Neff 68 Independent Financial Consultant; Director of North America Life Proposed
RR 1 Box 102A Assurance Co., Petroleum & Resources Corp. and The Adams Express
Weston, VT 05181 Co.; Director and Chairman of The Hanover Funds, Inc.; Director,
Chairman and President of The Hanover Investment Funds, Inc.
8
<PAGE>
<CAPTION>
Years First
Principal Occupations Became
Nominee Age for the Last Five Years a Trustee
- ------- --- ----------------------- -----------
<S> <C> <C> <C>
Roland R. Eppley, Jr. 63 Retired: formerly President and Chief Executive Officer, Eastern Proposed
105 Coventry Place States Bankcard Association Inc, (1971-1988); Director, Janel
Palm Beach Gardens, Hydraulics, Inc. and The Hanover Funds, Inc.
FL 33418
W.D. MacCallan 68 Director of The Adams Express Co., Petroleum & Resources Corp., Proposed
624 East 45th Street The Hanover Funds, Inc. and The Hanover Investment Funds, Inc.;
Savannah, GA 31405 formerly Chairman of the Board and Chief Executive Officer of The
Adams Express Co. and Petroleum & Resources Corp.
</TABLE>
- --------------
* Interested Trustee as defined under the 1940 Act. It is anticipated that as
of the date of the Holding Company Merger, Mr. Harkins will no longer be
considered an Interested Trustee.
The Board of Trustees met seven times during the twelve months ended December
31, 1995, and each of the Trustees attended at least 75% of the meetings.
The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Blum,
Cragin, Thode, Armstrong, Harkins,* Reid, and Vartabedian.* The function of
the Audit Committee is to recommend independent auditors and monitor
accounting and financial matters. The Audit Committee met two times during
the fiscal year ended August 31, 1995.
* Interested Trustees, see above.
Remuneration of Trustees and Certain
Executive Officers:
Each Trustee is reimbursed for expenses incurred in attend- ing each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the Adviser is compensated for his or her services according to
a fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by the Adviser. Each Trustee
receives a fee, allocated among all investment companies for which the
Trustee serves, which consists of an annual retainer component and a meeting
fee component. Effective August 21, 1995, each Trustee of the Vista Funds
receives a quarterly retainer of $12,000 and an additional per meeting fee of
$1,500. Prior to August 21, 1995, the quarterly retainer was $9,000 and the
per-meeting fee was $1,000. The Chairman of the Trustees and the Chairman of
the Investment Committee each receive a 50% increment over regular Trustee
total compensation for serving in such capacities for all the investment
companies advised by the Adviser.
Set forth below is information regarding compensation paid or accrued during
the fiscal year ended August 31, 1995 for each Trustee of the Trust:
<TABLE>
<CAPTION>
U.S. New York California
Government Global Tax Fee Prime Tax Free Tax Free
Money Money Money Money Money Money
Market Market Market Market Market Market
Fund Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $12,789.94 $10,079.61 $4,097.69 $2,974.65 $3,453.60 $531.54
Richard E. Ten Haken, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
William J. Armstrong, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
John R.H. Blum, Trustee 8,306.57 6,575.89 2,687.12 1,948.80 2,303.73 347.07
Joseph J. Harkins, Trustee 8,526.62 6,713.18 2,731.79 1,983.08 2,362.41 354.38
H. Richard Vartabedian, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
Stuart W. Cragin, Jr., Trustee 8,536.29 6,521.36 2,655.31 1,942.65 2,302.01 344.80
Irving L. Thode, Trustee 8,536.29 6,521.36 2,655.31 1,942.65 2,302.01 344.80
</TABLE>
<TABLE>
<CAPTION>
Federal Treasury New York Tax
Money Plus Tax Free Free California
Market Money Income Income Intermediate
Fund Market Fund Fund Fund Tax Free Fund
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $3,377.47 $489.54 $1,052.32 $971.82 $314.23
Richard E. Ten Haken, Trustee 2,251.63 326.37 701.55 647.85 209.49
William J. Armstrong, Trustee 2,251.63 326.37 701.55 647.85 209.49
John R.H. Blum, Trustee 2,187.37 323.30 685.48 633.77 204.80
Joseph J. Harkins, Trustee 2,251.63 326.37 701.55 647.85 209.49
H. Richard Vartabedian, Trustee 2,251.63 326.37 701.55 647.85 209.49
Stuart W. Cragin, Jr., Trustee 2,243.38 323.47 683.69 629.99 209.49
Irving L. Thode, Trustee 2,243.38 323.47 683.69 629.99 209.49
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Accrued from
as Fund Expenses "Fund Complex"(1)
- -----------------------------------------------------------------------
<S> <C> <C>
Fergus Reid, III, Trustee 0 $78,456.65
Richard E. Ten Haken, Trustee 0 52,304.39
William J. Armstrong, Trustee 0 52,304.39
John R.H. Blum, Trustee 0 51,304.37
Joseph J. Harkins, Trustee 0 52,304.39
H. Richard Vartabedian, Trustee 0 74,804.44
Stuart W. Cragin, Jr., Trustee 0 52,304.39
Irving L. Thode, Trustee 0 52,304.39
</TABLE>
- ---------------
(1) Data reflects total compensation earned during the period January 1,
1995 to December 31, 1995 for service as a Trustee to all thirty-two Funds
advised by the Adviser.
Vista Funds Retirement Plan for Eligible Trustees
Effective August 21, 1995, the Trustees also instituted a Retirement Plan for
Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not an
employee of any of the Funds, the Adviser, Administrator or Distributor or
any of their affiliates) may be entitled to certain benefits upon retirement
from the Board of Trustees. Pursuant to the Plan, the normal retirement date
is the date on which the eligible Trustee has attained age 65 and has
completed at least five years of continuous service with one or more of the
investment companies advised by the Adviser (collectively, the "Covered
Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds
an annual benefit commencing on the first day of the calendar quarter
coincident with or following his date of retirement equal to 10% of the
highest annual compensation received from the Covered Funds multiplied by the
number of such Trustee's years of service (not in excess of 10 years)
completed with respect to any of the Covered Funds. Such benefit is payable
to each eligible Trustee in monthly installments for the life of the Trustee.
Set forth in the table below are the estimated annual benefits payable to an
eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of December 31, 1995, the estimated credited
years of service for Messrs. Reid, Ten Haken, Armstrong, Blum, Harkins,
Vartabedian, Cragin, and Thode are 11, 11, 8, 11, 3, 3 and 3 respectively.
<TABLE>
<CAPTION>
Highest Annual Compensation
Paid by All Vista Funds
Years of $40,000 $45,000 $50,000 $55,000
Service Estimated Annual Benefit Upon Retirement
- ---------------------------------------------------
<S> <C> <C> <C> <C>
10 $40,000 $45,000 $50,000 $55,000
9 36,000 40,500 45,000 49,500
8 32,000 36,000 40,000 44,000
7 28,000 31,500 35,000 38,500
6 24,000 27,000 30,000 33,000
5 20,000 22,500 25,000 27,500
</TABLE>
Effective August 21, 1995, the Trustees instituted a Deferred Compensation
Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to
which each Trustee (who is not an employee of any of the Funds, the Adviser,
Administrator or Distributor or any of their affiliates) may enter into
agreements with the Funds whereby payment of the Trustees' fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination
of service). The deferred amounts are deemed invested in shares of a Fund on
whose Board the Trustee sits subject to the Trustee's election. The deferred
amounts are paid out in a lump sum or over a period of several years as
elected by the Trustee at the time of deferral. If a deferring Trustee dies
prior to the distribution of amounts held in the deferral account, the
balance of the deferral account will be distributed to the Trustee's
designated beneficiary in a single lump sum payment as soon as practicable
after such deferring Trustee's death. The following Eligible Trustees have
executed a deferred compensation agreement for the 1996 calendar year:
Messrs. Ten Haken, Thode and Vartabedian.
Principal Executive Officers:
The principal executive officers of the Trust are as follows:
H. Richard Vartabedian-President and Trustee.
Martin R. Dean-Treasurer and Assistant Secretary; Vice President, BISYS Funds
Group, Inc.
Ann Bergin-Secretary and Assistant Treasurer; Vice President, BISYS Funds
Group, Inc.; Secretary, Vista Broker-Dealer Services, Inc.
Ownership of Shares of the Funds. The Trustees and officers as a group
directly or beneficially own less than 1% of each Fund.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The election of each of the Nominees listed above requires the affirmative
vote of a majority of the votes entitled to be cast at the Meeting by all
shareholders of the Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
10
<PAGE>
PROPOSAL 3
RATIFICATION OF PRICE WATERHOUSE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board, including a majority of the trustees who are not interested
persons of the Trust, is recommending Price Waterhouse LLP to serve as
independent public accountants of each Fund for each Fund's 1996 fiscal year,
subject to the right of the Fund to terminate such employment immediately
without penalty by vote of a majority of the outstanding voting securities of
the Fund at any meeting called for such purpose. The Board's selection is
hereby submitted to the shareholders for ratification.
Price Waterhouse LLP served as the independent auditors for each of the Funds
during its most recent fiscal period ended August 31, 1995. Services
performed by Price Waterhouse LLP during such time have included the audit of
the financial statements of the Trust and services related to filings of the
Trust with the Commission. Price Waterhouse LLP has informed each Fund that
neither Price Waterhouse LLP nor any of its partners has any direct or
material indirect financial interest in the Trust. Representatives of Price
Waterhouse LLP are not expected to be present at the Meeting but have been
given the opportunity to make a statement if they so desire, and will be
available should any matter arise requiring their participation.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The ratification of the selection of Price Waterhouse LLP as the independent
public accountants of a Fund requires the affirmative vote of a majority of
the votes entitled to be cast at the Meeting by the shareholders of the
relevant Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
PROPOSAL 4
APPROVAL OR DISAPPROVAL OF A
MODIFICATION TO THE DECLARATION OF TRUST
Introduction
The Trust is organized as a Massachusetts business trust under the laws of
the Commonwealth of Massachusetts. Management has proposed, and the Board of
Trustees has approved, a modification to the Declaration of Trust which would
allow the Trustees to amend the Declaration of Trust with respect to any item
provided that such amendment, alteration, modification or repeal does not
adversely affect the economic value or legal rights of a shareholder upon
majority vote of the Board of Trustees. This would enable the Trustees to
amend and modify the Declaration of Trust when necessary to react to changes
in Massachusetts and other regulatory laws and to provide maximum flexibility
to the Trust and, therefore, the Funds and their shareholders.
Section 9.3.(a) of the Trust's Declaration of Trust currently provides "This
Declaration may be amended by Majority Shareholder Vote of the Shareholders
of the Trust or by any instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the holders of not less than a
majority of the Shares of the Trust. The Trustees may also amend this
Declaration without the vote or consent of Shareholders to designate series
in accordance with Section 6.9 hereof (or to modify any provision of this
Declaration to the extent deemed necessary or appropriate by the Trustees to
reflect such designation), to change the name of the Trust, to supply any
omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or if they may deem it necessary or advisable
to conform this Declaration to the requirements of applicable federal laws or
regulations or the requirements of the regulated investment company
provisions of the Internal Revenue Code of 1986, as amended, but the Trustees
shall not be liable for failing to do so."
If this Proposal is approved, Section 9.3.(a) will be revised to read as
follows (revised text in brackets): "This Declaration may be amended by
Majority Shareholder Vote of the Shareholders of the Trust or by any
instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the holders of not less than a majority of the
Shares of the Trust. The Trustees may also amend this Declaration without the
vote or consent of Shareholders to designate series in accordance with
Section 6.9 hereof (or to modify any provision of this Declaration to the
extent deemed necessary or appropriate by the Trustees to reflect such
designation), to change the name of the Trust, [to amend, alter, modify or
repeal any provision of this Declaration with respect to any item provided
that such amendment, alteration, modification or repeal does not adversely
affect the economic value or legal rights of a Shareholder] or if they may
deem it necessary or advisable to conform this Declaration to the
requirements of applicable federal laws or regulations or the requirements of
the regulated investment company provisions of the Internal Revenue Code of
1986, as amended, but the Trustees shall not be liable for failing to do so."
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATIONS
The approval of the proposed modification to the Declaration of Trust
requires the affirmative vote of a majority of the shareholders of the Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
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PROPOSALS 5a-l
APPROVAL OR DISAPPROVAL OF CERTAIN CHANGES TO
THE FUNDAMENTAL INVESTMENT RESTRICTIONS
OF THE FUNDS
Introduction to Proposals 5a-l
Proposals 5a-l concern proposed changes to the current fundamental investment
restrictions ("Restrictions") of the Funds. Each of these proposals relate to
Restrictions of a Fund which are presently classified as "fundamental," which
means that they can only be changed by a vote of the majority of the relevant
Fund's shareholders.
The Adviser recommended to the Trustees that it be authorized to analyze each
Fund's current Restrictions and, where practical and appropriate for each
Fund's investment objective, recommend to the Trustees whether, subject to
shareholder approval, certain changes should be adopted. Based on the
Adviser's review and recommendations, the Trustees believe that certain
changes should be implemented for each Fund. These changes fall within the
following categories:
Modification. The proposal involves a modification of certain Restrictions
for reasons outlined below.
Elimination. The proposal involves an elimination of certain Restrictions,
for reasons outlined below.
Reclassification. The proposal involves a reclassification of certain
Restrictions as nonfundamental restrictions, which could thereafter be
changed with the approval of the Trust's Board of Trustees, without a
shareholder vote.
Based on the recommendations of the Adviser, the Trustees have approved the
proposed changes and believe that they are in the best interests of the Funds
and their shareholders for the following reasons:
Standardization. Some of the Funds' Restrictions differ in form and substance
from similar restrictions of similar mutual funds currently advised by the
Adviser. Increased standardized restrictions among all Chase mutual funds
will help promote operational efficiencies and facilitate the monitoring of
portfolio compliance. In all cases, the adoption of the new or revised
restriction is not expected to have any impact on the investment techniques
employed by a Fund at this time.
Modernization. The Adviser has managed other funds with similar investment
objectives since 1987. The Funds' investment restrictions were derived from
these other Funds' investment restrictions as a matter of administrative
convenience. Therefore, the Funds' Restrictions are derived from restrictions
which have been in effect, without changes, for nine years. In connection
with the Mergers, the Adviser has recommended to all advised funds (including
the Funds) that their investment restrictions be evaluated and amended as
necessary. The Trustees, acting on the Adviser's recommendation, recommend
that each Fund should modernize its Restrictions, where appropriate, to
conform to current regulation and authorize the use of currently available
financial instruments and investment techniques.
Clarification. Some of the Funds' Restrictions contain ambiguities that, if
interpreted in a narrow way, might prevent the Fund from following the
original intent of the Restriction. Accordingly, the Trustees, acting on
Chase's recommendation, recommend that the Fund change the Restriction, where
appropriate, to eliminate any ambiguities. Some of these proposals include
the proposed division of a Restriction which currently covers multiple topics
into two or more distinct restrictions.
Flexibility. Several of the Funds' Restrictions are proposed to be changed so
as to allow the Funds to respond to recent and future regulatory developments
and changes in the financial markets. In addition, restrictions prohibiting
certain transactions have been or may be changed or eliminated by a federal
or state securities regulator. In order to take advantage of such changes,
the Funds would need shareholder approval, which is time consuming and costly
to the Fund and its shareholders. Chase believes that in most cases, the
proposed changes are not expected to have any immediate effect on the Funds'
investment strategy, since the Funds may not have a current intention of
changing their investment strategy. However, in order to give the Funds more
flexibility in responding to regulatory and market developments, the
Trustees, acting on the Adviser's recommendations, recommend changing,
reclassifying or eliminating some of the Restrictions described below so that
they can be changed by the Trustees without a shareholder vote. In the
future, when changes to nonfundamental restrictions of a Fund are adopted,
the Fund's statement of additional information will be amended to reflect the
changes and shareholders will be notified thereof.
The proposals regarding the Restrictions are presented in the Proposals 5a-l,
below, categorized by topic (e.g., borrowing, concentration, etc.). In each
case, the current Restriction is set forth in the left hand column under
"Current" and, for the Fund(s) to which the current Restriction applies, it
is proposed that the Restriction be restated, eliminated, reclassified, or
otherwise changed as indicated in the right hand column under "Proposed". In
each case, the reason for, and an explanation of, the proposed change, is set
forth below the comparison.
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Introduction to Proposals 5a-k:
Proposals 5a-k each apply to each of the Funds:
PROPOSAL 5a
AMENDMENT TO EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING BORROWING
Current:
No Fund may borrow money or pledge, mortgage or hypothecate its assets,
except that, as a temporary measure for extraordinary or emergency purposes,
or by engaging in reverse repurchase transactions, it may borrow in an amount
not to exceed 10% of the current value of its net assets, including the
amount borrowed, and may pledge, mortgage or hypothecate not more than 1/3 of
such assets to secure such borrowings (it is intended that, aside from
reverse repurchase transactions, money would be borrowed by a Fund only from
banks and only to accommodate requests for the repurchase of shares of the
Fund while effecting an orderly liquidation of portfolio securities),
provided that collateral arrangements with respect to a Fund's permissible
futures and options transactions, including initial and variation margin, are
not considered to be a pledge of assets for purposes of this restriction; the
Fund will not purchase investment securities if its outstanding borrowing,
including repurchase agreements, exceeds 5% of the value of the Fund's total
assets.
This fundamental restriction is substantially identical for each Fund, except
that Vista New York Tax-Free Money Market Fund, Vista U.S. Government Money
Market Fund, Vista California Intermediate Tax Free Fund, Vista New York Tax
Free Income Fund and Vista Tax Free Income Fund may each borrow an amount not
to exceed 1/3 of their respective net assets as a temporary measure for
extraordinary or emergency purposes.
Proposed:
Fundamental Restriction
No Fund may borrow money, except that each Fund may borrow money for
temporary or emergency purposes, or by engaging in reverse repurchase
transactions, in an amount not exceeding 33-1/3% of the value of its total
assets at the time when the loan is made and may pledge, mortgage or
hypothecate no more than 1/3 of its net assets to secure such borrowings. Any
borrowings representing more than 5% of a Fund's total assets must be repaid
before the Fund may make additional investments.
Explanation of the proposed change: The proposed amendment clarifies and
modernizes the restriction on borrowing. The proposed restriction will treat
borrowings for temporary or emergency purposes separately from other
borrowings. Borrowing may be necessary to address excessive or unanticipated
liquidations of Fund shares that exceed available cash. The proposed
amendment also would allow each Fund to enter into reverse repurchase
agreements, subject to a limitation of 33-1/3% of a Fund's assets.
Reverse repurchase agreements involve the sale of securities by a Fund with
an agreement that the Fund will repurchase such securities at an agreed upon
price and date. A Fund may employ reverse repurchase agreements when
necessary to meet unanticipated net redemptions so as to avoid liquidating
portfolio investments during unfavorable market conditions. At the time it
enters into a reverse repurchase agreement, a Fund will place in a segregated
custodial account high-quality liquid debt securities having a dollar value
equal to the repurchase price.
PROPOSAL 5b
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
INVESTMENT FOR THE PURPOSE OF EXERCISING CONTROL
Current:
Vista New York Tax Free Money Market Fund, Vista Tax Free Money Market Fund,
Vista California Tax Free Money Market Fund, Vista U.S. Government Money
Market Fund, Vista California Intermediate Tax Free Fund, Vista Tax Free
Income Fund and Vista New York Tax Free Income Fund may not purchase
securities of any issuer if such purchase at the time thereof would cause
more than 10% of the voting securities of such issuer to be held by a Fund.
Vista Treasury Plus Money Market Fund, Vista Federal Money Market Fund, Vista
Global Money Market Fund and Vista Prime Money Market Fund may not purchase
any voting securities.
Proposed:
Nonfundamental Restriction
No Fund may, with respect to 75% (50% with respect to Vista New York Tax Free
Money Market Fund, Vista Tax Free Money Market and Vista California Tax Free
Money Market Fund) of its assets, hold more than 10% of the outstanding
voting securities of an issuer.
To the extent the shareholders of the Vista California Intermediate Tax Free
Fund approve Proposal 5l, such Fund will also be limited with respect to 50%
of its assets.
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Explanation of the proposed change: The proposed amendment would clarify, for
all Funds, that the restriction involving a 10% limitation on investments in
an issuer is a limitation based upon the outstanding voting securities of the
issuer as provided for in Sub-chapter M of the Internal Revenue Code and
would not be applicable outside the diversification requirements which are
applicable only to 75% (50% with respect to the Vista New York Tax Free Money
Market Fund, Vista Tax Free Money Market Fund and Vista California Tax Free
Money Market Fund) of a Fund's assets. Although the restrictions as restated
would allow the non-diversified Funds to hold a larger portion of each Fund's
assets in the outstanding voting securities of one issuer, there is no
current intention for any of the Funds to do so. The diversified Funds would
still be required to meet the additional diversification requirements of the
1940 Act. In addition, the reclassification as nonfundamental and restatement
of the restriction would clarify and help standardize the restriction.
PROPOSAL 5c
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE MAKING OF LOANS
Current:
The Funds are not permitted to make loans to other persons, except except (i)
with respect to each of the Funds, except for Vista New York Tax Free Money
Market Fund and Vista Tax Free Money Market Fund, through the lending of
their portfolio securities and provided that any such loans not exceed 30%
(except for Vista U.S. Government Money Market Fund which may not exceed 20%)
of a Fund's total assets (taken at market value), (ii) through the use of
repurchase agreements or the purchase of short-term obligations and provided
that not more than 10% of a Fund's total assets will be invested in
repurchase agreements maturing in more than seven days, or (iii) by
purchasing, subject to the limitation on illiquid and restricted securities
above, a portion of an issue of debt securities of types commonly distributed
privately to financial institutions, for which purposes the purchase of
short-term commercial paper or a portion of an issue of debt securities which
are part of an issue to the public shall not be considered the making of a
loan.
Proposed:
Fundamental Restriction
No Fund may make loans, except that each Fund may: (i) purchase and hold debt
instruments (including without limitation, bonds, notes, debentures or other
obligations and certificates of deposit, bankers' acceptances and fixed time
deposits) in accordance with its investment objectives and policies; (ii)
enter into repurchase agreements with respect to portfolio securities; and
(iii) lend portfolio securities with a value not in excess of one-third of
the value of its total assets.
Explanation of the proposed change: The proposed amendment is intended to
clarify the basic limitation on securities lending, and would also exclude
those transactions that current regulatory interpretations and policies
allow. The investment adviser will not make loans of a Fund's portfolio
securities (or enter into repurchase agreements) unless it receives
collateral that is at least 102% of the value of the loan, including accrued
interest. During the time portfolio securities are on loan, the borrower pays
the Fund any dividends or interest paid on such securities, and the Fund may
invest the cash collateral and earn additional income, or it may receive an
agreed-upon amount of interest income from the borrower who had delivered
equivalent collateral or a letter of credit. As with other extentions of
credit, there are risks of delay in recovery or even loss of rights in the
collateral should the borrower of any loaned securities fail financially.
PROPOSAL 5d
RECLASSIFICATION OF EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING PURCHASES OF SECURITIES ON MARGIN
Current:
No Fund may purchase any security or evidence of interest therein on margin,
except that such short-term credit may be obtained as may be necessary for
the clearance of purchases and sales of securities and except that, with
respect to the Fund's permissible options and futures transactions, deposits
of initial and variation margin may be made in connection with the purchase,
ownership, holding or sale of futures or options positions.
Proposed:
Nonfundamental Restriction
No Fund may make short sales of securities, other than short sales "against
the box," or purchase securities on margin except for short- term credits
necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures
contracts and related options, in the manner otherwise permitted by the
investment restrictions, policies and investment program of a Fund.
Explanation of the proposed change: The proposed change modernizes and
clarifies the circumstances under which a Fund may make margin purchases and
short sales. The reclassification as nonfundamental could enable the Funds to
respond more quickly to changes in financial markets.
In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. In
an investment technique known as a short sale "against the box", an investor
sells securities short while owning the same securities in the same amount,
or having the right to obtain equivalent securities. Certain state
regulations currently prohibit mutual funds from entering into any short
sales, other than short sales against the box. If the proposal is approved,
however, the Board of Trustees would be able to change the proposed
non-fundamental restriction in the future, without a vote of shareholders, if
state regulations were to change to permit other types of short sales, or if
waivers from existing requirements were available, subject to appropriate
disclosure to investors. Although elimination of the Funds' fundamental
restriction on short selling will not affect the Funds' investment techniques
at this time, in the event of a change in state regulatory requirements, a
Fund may alter its investment practices in the future.
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PROPOSAL 5e
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING CONCENTRATION OF INVESTMENT
Current:
No Fund may concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of a Fund's investment objective,
up to 25% of the assets of the Fund, at market value at the time of each
investment, may be invested in any one industry, except that, with respect to
a Fund's permissible futures and options transactions, positions in options
and futures shall not be subject to this restriction, except that the Fund
may invest more than 25% of its total assets in obligations issued by banks,
and in obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities.
This fundamental restriction is substantially identical for each Fund, except
that (i) Vista New York Tax Free Income Fund and Vista Tax Free Income Fund
may not invest more than 25% of their respective total assets in obligations
issued by banks, (ii) Vista Global Money Market Fund and Vista Prime Money
Market Fund may invest more than 25% of their respective total assets in U.S.
banks, foreign banks and their branches, and (iii) Vista New York Tax Free
Money Market Fund, Vista Tax Free Money Market Fund, Vista California Tax
Free Money Market Fund and Vista California Intermediate Tax Free Fund may
invest more than 25% of their respective total assets in municipal
obligations secured by bank letters of credit or guarantees, including
participation certificates (except for Vista California Intermediate Tax Free
Fund).
For purposes of the above investment restriction, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as
an "industry."
Proposed:
Fundamental Restriction
No Fund may purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a result,
more than 25% of the Fund's total assets would be invested in the securities
of companies whose principal business activities are in the same industry.
Notwithstanding the foregoing, (i) with respect to a Fund's permissible
futures and options transactions in U.S. government securities, positions in
such options and futures shall not be subject to this restriction; (ii) the
Money Market Funds may invest more than 25% of their total assets in
obligations issued by banks, including U.S. banks; (iii) Vista New York Tax
Free Money Market Fund, Vista California Tax Free Money Market Fund and Vista
Tax Free Money Market Fund may invest more than 25% of their respective
assets in municipal obligations secured by bank letters of credit or
guarantees, including participation certificates and (iv) more than 25% of
the assets of Vista California Intermediate Tax Free Income Fund may be
invested in municipal obligations secured by bank letters of credit or
guarantees.
Explanation of the proposed changes: The proposed amendment is intended to
clarify the basic limitation on concentration of investment and now would
specifically exclude government securities and repurchase agreements secured
thereby, securities issued by banks and positions in options and futures from
the limitations imposed by the restriction.
PROPOSAL 5f
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING COMMODITIES AND REAL ESTATE
Current:
No Fund may purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or commodity
contracts in the ordinary course of business, other than with respect to the
Fund's permissible futures and options transactions.
Proposed:
Fundamental Restriction
No Fund may purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments but this shall not prevent a
Fund from (i) purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities
or (ii) engaging in forward purchases or sales of foreign currencies or
securities.
Fundamental Restriction
No Fund may purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund from investing in securities or other instruments backed by real estate
or securities of companies engaged in the real estate business). Investments
by a Fund in securities backed by mortgages on real estate or in marketable
securities of companies engaged in such activities are not hereby precluded.
Nonfundamental Restriction
No Fund may purchase or sell interests in oil, gas or mineral leases.
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Explanation of the proposed changes: The proposed changes conform the
application of the restrictions pertaining to commodities and real estate to
the current regulations of the 1940 Act by clarifying that certain newer
financial instruments may be purchased by the Funds. To a large extent, the
proposed amendment would also standardize the restrictions applicable to each
of the respective Funds by allowing all the Funds to engage in certain
transactions such as forward purchases when it is consistent with the Funds'
investment objectives and policies.
PROPOSAL 5g
AMENDMENT OF EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING INVESTMENTS IN RESTRICTED AND ILLIQUID SECURITIES
Current:
No Fund may knowingly invest in securities which are subject to legal or
contractual restrictions on resale (including securities that are not readily
marketable, but not including repurchase agreements maturing in not more than
seven days) if, as a result thereof, more than 10% of the Fund's total assets
(taken at market value) would be so invested (including repurchase agreements
maturing in more than seven days).
Proposed:
Nonfundamental Restriction
No Fund may invest more than 15% (except for the Money Market Funds, which
may not invest more than 10%) of its net assets in illiquid securities.
Explanation of the proposed changes: The current fundamental restrictions
limit purchases of all securities that are subject to restrictions on resale,
including securities that are not readily marketable and repurchase
agreements maturing in more than seven days. These restrictions include
securities eligible for resale under Rule 144A and Section 4(2) commercial
obligations. The proposed non-fundamental restriction incorporates recent
developments in securities markets. Under the proposed restriction,
securities issued under such exemptions from registration, although
restricted, may still be classified as liquid in accordance with procedures
established by the Board of Trustees. This investment practice could have the
effect of increasing the level of illiquidity in a Fund. Furthermore, to the
extent that a market does not develop or ceases to exist with respect to
these restricted securities, illiquidity levels will increase.
When purchasing securities which could not be sold without registration under
the Securities Act of 1933, a Fund will endeavor to obtain the right to
registration at the expense of the issuer. Generally, there will be a lapse
of time between a Fund's decision to sell any such security and the
Registration of the Security permitting sale. During any such period, the
price of the securities will be subject to market fluctuations.
The proposed changes would standardize, among all Funds, the applicable
investment restriction, and would remove from all of the descriptions certain
interpretations of what may constitute illiquid securities. By doing this,
each Fund would be subject to the same current interpretations, from to time,
of what constitutes an illiquid security, under SEC releases and other
relevant authority. The defundamentalization of this restriction would avoid
the delay and expense of a shareholder vote in the event that the permissible
guidelines for investments in illiquid securities changes at some time in the
future. This limitation may be subject to additional restrictions imposed by
jurisdictions in which a Fund's shares are offered for sale.
PROPOSAL 5h
RECLASSIFICATION OF EACH FUND'S FUNDAMENTAL
RESTRICTION CONCERNING THE USE OF OPTIONS
Current:
No Fund may write, purchase or sell any put or call option or any combination
thereof, provided that this shall not prevent (i) the writing, purchasing or
selling of puts, calls or combinations thereof with respect to U.S.
Government securities or (ii) permissible futures and options transactions,
the writing, purchasing, ownership, holding or selling of futures and options
positions or of puts, calls combinations thereof with respect to futures.
Proposed:
Nonfundamental Restriction
No Fund may write, purchase or sell any put or call option or any combination
thereof, provided that this shall not prevent (i) with respect to all of the
Funds, the writing, purchasing or selling of puts, calls or combinations
thereof with respect to portfolio securities or (ii) with respect to a Fund's
permissible futures and options transactions, the writing, purchasing,
ownership, holding or selling of futures and options positions or of puts,
calls or combinations thereof with respect to futures.
Explanation of the proposed change: The proposed reclassification of this
Restriction as nonfundamental would avoid the delay and expense of a
shareholder vote in the event that the permissible guidelines for such
investments changes at some time in the future. The terms of this Restriction
are consistent with general restrictions, including limitations on liquidity
and portfolio diversification. Therefore, no foreseeable impact on the Funds
is anticipated by the proposed reclassification.
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Proposal 5i
AMENDMENT TO EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING SENIOR SECURITIES
Current:
No Fund may issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder, provided that collateral arrangements
with respect to the Fund's permissible options and futures transactions,
including deposits of initial and variation margin, are not considered to be
the issuance of a senior security for purposes of this restriction.
Proposed:
Fundamental Restriction
No Fund may issue any senior security (as defined in the 1940 Act), except
that (a) a Fund may engage in transactions that may result in the issuance of
senior securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) a Fund may acquire
other securities, the acquisition of which may result in the issuance of a
senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the restrictions set
forth above, a Fund may borrow money as authorized by the 1940 Act. For
purposes of this restriction, collateral arrangements with respect to a
Fund's permissible options and futures transactions, including deposits of
initial and variation margin, are not considered to be the issuance of a
senior security.
Explanation of the proposed change: Under the 1940 Act, an open-end
investment company (such as the Trust) cannot issue senior securities except
under certain very limited conditions. The proposed amendment clarifies and
modernizes the language concerning senior securities to conform to provisions
of the 1940 Act. It is proposed that this restriction exclude those
transactions which are allowed by current regulatory interpretations and
policies, and which are consistent with current investment marketplace
practices. Therefore, the proposed fundamental restrictions will allow, for
example, the following investments even though they may result in the
issuance of senior securities: The Funds could, to the extent permitted by
applicable law or exemptive order (a) enter into commitments, including
reverse repurchase agreements and delayed delivery and when-issued
securities; (b) engage in transactions that may result in the issuance of a
senior security; (c) engage in short sales of securities; (d) purchase and
sell futures contracts and related options; (e) borrow money; and (f) issue
multiple classes of securities; subject, in each case, to any other
applicable restrictions.
PROPOSAL 5j
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING SHORT SALES OF SECURITIES
Current:
No Fund may make short sales of securities or maintain a short position;
except (with respect to each Fund except Vista U.S. Government Money Market
Fund and Vista Global Money Market Fund) a Fund may only make such short
sales of securities or maintain a short position if when a short position is
open the Fund owns an equal amount of such securities or securities
convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to,
the securities sold short, and not more than 10% of the Fund's net assets
(taken at market value) is held as collateral for such sales at any one time
(it is the present intention of management to make such sales only for the
purpose of deferring realization of gain or loss for federal income tax
purposes; such sales would not be made of securities subject to outstanding
options).
Proposed:
It is proposed that this restriction be eliminated, as it has been combined
with a nonfundamental restriction concerning purchase of securities on
margin, (see Proposal 5d above).
Explanation of the proposed change: For an explanation of short sales see
Proposal 5d above.
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PROPOSAL 5k
APPROVAL OF A NEW FUNDAMENTAL INVESTMENT
POLICY PERMITTING EACH
FUND TO INVEST ALL OF ITS INVESTABLE
ASSETS IN ANOTHER INVESTMENT COMPANY
Introduction: Master/Feeder Fund Structure
At a meeting held on December 14, 1995, the Board considered and approved,
subject to shareholder approval, the adoption of a new fundamental investment
policy with respect to each Fund which would allow each Fund to convert to a
Master/Feeder Structure. The Master/Feeder Fund Structure is an arrangement
that allows several investment companies with different shareholder- related
features or distribution channels, but having substantially the same
investment objective, policies and restrictions, to combine their investments
by investing all of their investable assets in the same portfolio instead of
managing them separately, which may result in economies of scale.
There is no present intention to convert any Fund to a Master/ Feeder Fund
Structure. In adopting this new fundamental investment policy, a Fund would
be given the flexibility to convert to a Master/Feeder Fund Structure and
pursue investment opportunities consistent with its investment objective with
the approval of the Board, without the requirement of submitting such matter
to a vote of shareholders, which is a time-consuming and expensive process.
The Board will consider and evaluate specific proposals prior to the
implementation of any conversion to a Master/Feeder Fund Structure. A Fund's
prospectus and statement of additional information would be amended to
reflect the implementation of the Fund's conversion to a Master/Feeder Fund
Structure and its shareholders would be notified.
Under a Master/Feeder Fund Structure, a Fund will have the ability to invest
all of its investable assets in another investment company (the "Master
Portfolio") having substantially the same investment objectives and policies
as the Fund in exchange for shares of beneficial interest in the Master
Portfolio. This could mean that the only investment securities that will be
held by a Fund will be the Fund's interest in the Master Portfolio. Each
Master Portfolio will be a series of an investment company ("Master Trust"),
as each Fund is a series of the Trust.
Conversion to a Master/Feeder Fund Structure may serve to attract other
collective investment vehicles with different shareholder servicing or
distribution arrangements and with shareholders that would not have invested
in a Fund. In this event, additional assets may allow for operating expenses
to be spread over a larger asset base. In addition, a Master/Feeder Fund
Structure may serve as an alternative for large, institutional investors in a
Fund who may prefer to offer separate, proprietary investment vehicles and
who otherwise might establish such vehicles outside of a Fund's current
operational structure. Conversion to a Master/Feeder Fund Structure may allow
a Fund to stabilize its expenses and achieve certain operational
efficiencies. No assurance can be given, however, that the Master/Feeder Fund
Structure will result in a Fund stabilizing its expenses or achieving greater
operational efficiencies.
New Investment Policy
The Board has approved with respect to each Fund, subject to shareholder
approval, the adoption of a new fundamental investment policy that would
permit a Fund to convert to the Master/ Feeder Fund Structure by investing
all of its investable assets in another appropriate investment fund. As
discussed above under "Introduction: Master/Feeder Fund Structure," the
purpose of this Proposal is to allow a Fund to enhance its flexibility and
permit it to take advantage of potential efficiencies available through
investment of all of its investable assets in another investment company. At
present, certain of the fundamental investment restrictions of each Fund,
such as those limiting investment in a single issuer or concentration in an
industry, may prevent it from investing all or a part of its assets in
another registered investment company. The Board proposes that these
restrictions be modified by adding the following fundamental investment
policy:
Notwithstanding any other investment policy or restriction, a Fund may seek
to achieve its investment objective by investing all of its investable assets
in another investment company having substantially the same investment
objective and policies as the Fund.
A Fund's methods of operation and shareholder services would not be
materially affected by its investment in a corresponding Master Portfolio,
except that the assets of the Fund may be managed as part of a larger pool.
If a Fund invested all of its assets in a Master Portfolio, it would hold
only beneficial interests in the Master Portfolio; the Master Portfolio would
directly invest in individual securities of other issuers. The Fund would
otherwise continue its normal operation. The Board would retain the right to
withdraw a Fund's investment from its corresponding Master Portfolio at any
time it determines that it would be in the best interests of shareholders;
the Fund would then resume investing directly in individual securities of
other issuers or invest in another Master Portfolio.
Additional Information Regarding Each Master Portfolio
Each Master Portfolio would be a series of a Master Trust which, like the
Trust, would be an open-end management investment company under the 1940 Act.
It is expected that the Master Trust would have one series to correspond to
each series of the Trust that converts to the Master/Feeder Fund Structure.
The investment objective and policies of each Master Portfolio would be
substantially the same as those of the corresponding Fund; in seeking to
achieve the same objective as the Fund, the Master Portfolio would invest in
the same type of securities and engage in the same transactions permitted by
the investment policies and restrictions of the corresponding Fund.
The Adviser would be the investment adviser of each Fund's corresponding
Master Portfolio. Similarly, CAM Inc. or TCB, as applicable, would serve as
Sub Adviser to the Master Portfolio. See Proposals 1, 8 and/or 9. Entities or
their successors in the Bank Merger that currently perform services with
respect to each Fund, such as administrative or custodial services, would
perform substantially similar services for each Master Portfolio.
Each Master Portfolio normally would not hold meetings of investors except as
required under the 1940 Act. As an investor in the Master Portfolio, a Fund
would be entitled to vote in proportion to its relative interest in the
Master Portfolio. As to any issue on which Fund shareholders vote, a Fund
would vote its interest in the
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Master Portfolio in proportion to the votes cast by its shareholders. If
there were other investors in the Master Portfolio, there could be no
assurance that any issue that receives a majority of the votes cast by a
Fund's shareholders would receive a majority of votes cast by all Master
Portfolio shareholders.
Changing a fundamental policy of a Master Portfolio would require approval of
the holders of a majority of interests in the Master Portfolio. The Board of
Trustees of the Master Trust would have the ability to change nonfundamental
policies without prior interestholder approval.
In addition to a vote to change a fundamental policy, examples of matters
that would require approval of shareholders of the Master Trust include,
subject to applicable statutory and regulatory requirements: the election of
Trustees; approval of an investment advisory contract; certain amendments to
the Trust Instrument of the Master Trust; a merger, consolidation or sale of
substantially all of a Master Portfolio's assets; or any additional matters
required or authorized by the Trust Instrument of the Master Trust or any
registration statement of the Master Trust, or as the Trustees may consider
desirable.
Generally, a Fund would hold a meeting of its shareholders to obtain
instructions on how to vote its interest in the Master Portfolio when the
Master Portfolio is conducting a meeting of its shareholders. However,
subject to applicable statutory and regulatory requirements, a Fund would not
seek instructions from its shareholders with respect to (i) any proposal
relating to the Master Portfolio which, if made with respect to a Fund, would
not require the vote of Fund shareholders, or (ii) any proposal relating to
the Master Portfolio that is identical in all material respects to a proposal
previously approved by the Fund's shareholders.
Examples of proposals with respect to a Master Portfolio that may not require
the approval of shareholders of its corresponding Fund would include the
following, subject to applicable statutory and regulatory requirements: (i)
approval of an Advisory Agreement with the Adviser, or its successor in the
Bank Merger (or a subsidiary or affiliate), on terms that do not differ in
any material respect from an Advisory Agreement currently in effect with
respect to that Fund; (ii) election of Trustees of the Master Trust who had
previously been elected as Trustees of the Trust; and (iii) selection, or
ratification of the selection of, a firm of independent certified public
accountants that had previously been approved by shareholders of that Fund.
Examples of matters that would be submitted to shareholders of a Master
Portfolio's corresponding Fund would include the following: (i) approval of
an Advisory Agreement with an investment adviser other than the Adviser, or
its successor in the Bank Merger (or a subsidiary or affiliate), or one that
provided for compensation in excess of the amount of compensation payable to
the Adviser pursuant to the Advisory Agreement in effect with respect to that
Fund, (ii) election when required by the 1940 Act of Trustees of the Master
Trust who had not previously been elected by shareholders as Trustees of the
Trust; or (iii) selection of, or the ratification of the selection of, a firm
of independent certified public accountants that had not previously been
approved by the shareholders of the Fund. Any proposal submitted to holders
in a Master Portfolio, and that is not required to be voted on by
shareholders of that Master Portfolio's corresponding Fund, would nonetheless
be voted on by the Trustees of the Trust.
The Master Trust's operations would be governed by its Trust Instrument, and
applicable law. The operations of the Master Trust and the Master Portfolios,
like those of the Trust and the Funds, would be subject to the provisions of
the 1940 Act and the rules and regulations of the SEC thereunder and
applicable state securities laws.
Trustees and Officers of the Master Trust
The initial interestholders of the Master Trust would be expected to elect as
Trustees of the Master Trust, the individuals serving as members of the Board
of Trustees of the Trust. See Proposal 2. Subject to the provisions of its
Trust Instrument, the business of the Master Trust would be supervised by its
Trustees, who would serve indefinite terms and who would have all powers
necessary or convenient to carry out their responsibilities. The Trustees of
the Master Trust would elect officers of the Master Trust whom they deemed
appropriate.
Tax Consequences of Investment in a Master Portfolio
The Trust would apply for a ruling from the Internal Revenue Service ("IRS")
or would obtain an opinion of the tax counsel to the effect that its
contribution of assets of a Fund to its corresponding Master Portfolio in
exchange for an interest in that Master Portfolio would not result in the
recognition of gain or loss to that Fund for federal income tax purposes.
It is intended that each Fund would continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986.
In each taxable year that a Fund so qualified, the Fund (but not its
shareholders) would be relieved of Federal income tax on that part of its
investment company taxable income and net capital gain that is distributed to
its shareholders. Neither a Fund nor the Master Portfolio would be expected
to be required to pay any Federal income or excise taxes. Distributions from
a Fund, except for distributions from a Fund designated as long-term capital
gain distributions, would continue to be taxable to its shareholders as
ordinary income, whether received in cash or reinvested in Fund shares.
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PROPOSAL 5l
CHANGE OF THE VISTA CALIFORNIA INTERMEDIATE
TAX FREE FUND'S STATUS FROM DIVERSIFIED
TO NONDIVERSIFIED UNDER THE 1940 ACT
Proposal 5l relates to the Vista California Intermediate Tax Free Fund Only:
The Vista California Intermediate Tax Free Fund is currently classified as a
"diversified" fund under the provisions of the 1940 Act. Under the 1940 Act,
a "diversified" fund is defined to mean one which meets the following
requirements:
At least 75 percentum of the value of its total assets is represented by
cash and cash items (including receivables), Government securities,
securities of other investment companies, and other securities for the
purposes of this calculation limited in respect of any one issuer to an
amount not greater in value than 5 percentum of the value of the total assets
of the fund and to not more than 10 percentum of the outstanding voting
securities of such issuer.
The 1940 Act provides that a fund may not change its status from a
diversified to a nondiversified fund without the requisite approval from the
Fund's shareholders. The Board is hereby proposing that the shareholders of
the Vista California Intermediate Tax Free Fund approve of a change of status
from a diversified to a nondiversified with respect to such Fund.
This Proposal relates only to the Fund's status under, and the related
requirement of, the 1940 Act. If this proposal is approved, the Fund would
still be subject to certain asset diversification requirements (as well as
other requirements) under Subchapter M under the Internal Revenue Code of
1986, as amended. These requirements apply because the Fund has elected to be
taxed as a "regulated investment company," and receive the benefits provided
to such entities under Subchapter M. One such benefit is "flow- through tax
treatment"--in other words, that income and gains received by the Fund are
not taxed to the Fund, but are taxed to shareholders when distributed by the
Fund. The asset diversification requirements under Subchapter M are similar
to the requirements for a "diversified" status under the 1940 Act, except
that the Subchapter M diversification requirements limiting investments in
the same issuer to no more than 5% of a fund's assets and to 10% of the
issuer's voting securities are applicable only with respect to 50% (rather
than 75% of the total assets of the Fund).
Reasons for the proposed change:
Currently, with respect to 75% of the Fund's assets, no more than 5% of the
Fund's assets may be invested in one issuer. With respect to municipal
securities, the issuers consist of either a particular state (for a general
obligations bond or note) or the particular facility which backs the payment
obligation under a revenue bond. At certain times, the Fund may wish to take
advantage of certain favorable investments of any such issuer, involving more
than 5% of the Fund's assets. This would help provide additional flexibility
for the investment of the Fund's assets.
ADDITIONAL INFORMATION REGARDING
PROPOSALS 5a-5l
Unless otherwise noted, whenever an amended or restated investment policy or
limitation states a maximum percentage of a Fund's assets that may be
invested, such percentage limitation will be determined immediately after and
as a result of the acquisition of such security or other asset, except in the
case of borrowing (or other activities that may be deemed to result in the
issuance of a "senior security" under the 1940 Act) or illiquid securities.
Any subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Funds's
investment policies and limitations. If any of Proposals 5a-l are not
approved by shareholders, the current Restriction will remain unchanged.
REQUIRED VOTE AND BOARD OF TRUSTEES'
RECOMMENDATION
Each of the above proposals to change a Fund's Restriction requires the
approval of a "majority of the outstanding voting securities" of the relevant
Fund, which for this purpose means the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Fund or (2) 67% or more of the
shares of the Fund present at the meeting if more than 50% of the outstanding
shares of the Fund are represented at the meeting in person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSALS
PROPOSAL 6
APPROVAL OR DISAPPROVAL OF A
RESTATEMENT OF THE INVESTMENT OBJECTIVES
OF CERTAIN FUNDS
Proposal 6 relates to all Funds other than Vista California Intermediate Tax
Free Fund, Vista New York Tax Free Income Fund and Vista Tax Free Income
Fund.
At a Meeting of the Board of Trustees of the Trust held on December 14, 1995,
the Trustees, including each of the Disinterested Trustees (who are not
"interested persons," within the meaning of the 1940 Act, of the Trust or any
Fund's investment adviser), on the recommendation of the Adviser, considered
and unanimously approved of a restatement of the investment objectives of the
Funds.
The Adviser has evaluated the various types of Funds that comprise the Trust
and recommended to the Trustees that it would be appropriate to modernize the
investment objectives, policies and restrictions, and implement certain
changes that would provide greater flexibility and uniformity in managing the
Funds. The Trustees determined that many of the Funds' investment objectives
should be restated so as to be less restrictive.
In the table below, the current investment objective of each Fund is set
forth in quotations in the left hand column. In each case, it is proposed
that the investment objective be restated to read as indi-
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cated in quotations in the right hand column. In many cases, it is proposed
that certain investment policies now included within the investment objective
(and which are therefore currently fundamental) be reclassified as
nonfundamental investment policies. In each such case, the proposed
nonfundamental policies and the reason for the proposed change are indicated
in the right hand column. A description of each of these reasons is set forth
below following the table. To the extent that certain investment styles or
policies which are currently included in the investment objective are removed
from the investment objective and made nonfundamental policies, they may be
changed thereafter without the approval of shareholders.
In addition, the Trustees, based on representations from the Adviser, believe
that the risks inherent in investing in each of the respective Funds should
not change from those inherent at the present time under each Fund's current
investment objective and policies, since the Adviser has represented that
none of the proposed changes is intended or anticipated to have an immediate
impact on the day to day investment program utilized by a Fund.
The significance of an investment policy or restriction being fundamental is
that it may be changed only with the approval of shareholders. Except for
each Fund's investment objective, investment policies or restrictions which
are specifically identified as fundamental, each Fund's investment objective,
policies and restrictions are nonfundamental.
Current Investment Objective
Vista Treasury Plus Money Market Fund
"to provide maximum current income consistent with the preservation of capital
and maintenance of liquidity through investment in (i) obligations issued by
the U.S. Treasury bills and notes and (ii) repurchase agreements fully
collateralized by such U.S. Treasury obligations."
Proposed Investment Objective
"to provide maximum current income consistent with the preservation of capital
and maintenance of liquidity."
As a non-fundamental policy, the Fund will seek to achieve its objective
through investment "in obligations issued by the U.S. Treasury, including
Treasury bills, bonds and notes, and repurchase agreements fully
collateralized by U.S. Treasury obligations."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Federal Money Market Fund
"to provide current income consistent with the preservation of capital and
maintenance of liquidity, through investments in obligations issued or
guaranteed as to principal and interest by the U.S. Government or by U.S.
Government agencies or instrumentalities, the interest income from which,
under current federal law, generally may not be subject to state or local
taxes."
Proposed Investment Objective
"to provide current income consistent with preservation of capital and
maintenance of liquidity."
As a non-fundamental policy, the Fund will seek to achieve its objective
through "investment in obligations issued or guaranteed as to principal and
interest by the U.S. Government or by U.S. Government agencies or
instrumentalities, the interest income from which, under current federal law,
generally may not be subject to state or local taxes."
Reason for proposal: flexibility.
Current Investment Objective
Vista New York Tax Free Money Market Fund
"to provide as high a level of current income which is exempt from federal,
New York State and New York City personal income taxes as is consistent with
the preservation of capital and maintenance of liquidity, through investments
primarily in short-term municipal obligations issued by or on behalf of the
State of New York, its instrumentalities or political subdivisions."
"to provide as high a level of current income which is excluded from gross
income for federal income tax purposes and from New York State and and New
York City personal income taxes as is consistent with the preservation of
capital and maintenance of liquidity."
As a non-fundamental policy, the Fund will seek to achieve its objective "by
investing in a non-diversified portfolio of short-term, fixed rate and variable
rate municipal obligations."
Reasons for proposal: flexibility.
Current Investment Objective
Vista Tax Free Money Market Fund
"to provide as high a level of current income which is exempt from federal
income taxes as is consistent with the preservation of capital and maintenance
of liquidity, through investments rimarily in short-term municipal
obligations."
Proposed Investment Objective
"to provide as high a level of current income which is excluded from gross
income for federal income tax purposes as is consistent with the preservation
of capital and maintenance of liquidity."
As a non-fundamental policy, the Fund will seek to achieve its objective "by
investing in short-term, fixed rate and variable rate municipal obligations."
Reason for the proposal: flexibility.
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Current Investment Objective
Vista U.S. Government Money Market Fund
"to provide as high a level of current income as is consistent with the
preservation of capital and maintenance of liquidity, through investments in
obligations issued or guaranteed by the U.S. Treasury, agencies of the U.S.
Government or instrumentalities that have been established or sponsored by the
U.S. Government."
Proposed Investment Objective
"to provide as high a level of current income as is consistent with the
preservation of capital and maintenance of liquidity."
As a non-fundamental policy, the Fund will seek to achieve its objective "by
investing in obligations issued or guaranteed by the U.S. Treasury, by
agencies of the U.S. Government, and by instrumentalities that have been
established or sponsored by the U.S. Government, and in repurchase agreements
collateralized by U.S. Government obligations or other securities in which the
Fund is permitted to invest."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Global Money Market Fund
"to provide maximum current income consistent with the preservation of capital
and maintenance of liquidity, through investments in (i) U.S. Dollar
denominated high quality commercial paper and other high quality short-term
obligations, including floating and variable rate master demand notes of U.S.
and foreign corporations; (ii) U.S. Dollar denominated obligations of foreign
governments and supranational agencies (e.g., the International Bank for
Reconstruction and Development); (iii) U.S. Dollar denominated obligations
issued or guaranteed by U.S. banks with total assets exceeding $1 billion and
by the 75 largest foreign commercial banks (including obligations of foreign
branches of such banks) in terms of total assets, or such other U.S. or
foreign commercial banks which are judged by the Fund's investment adviser to
meet comparable credit criteria; (iv) securities issued or guaranteed by the
U.S. Government or by agencies and instrumentalities thereof; and (v)
repurchase agreements."
Proposed Investment Objective
"to provide maximum current income consistent with the preservation of capital
and maintenance of liquidity."
As a non-fundamental policy, the Fund will seek to achieve its objective "by
investing in high quality, short-term U.S. dollar-denominated money market
instruments."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Prime Money Market Fund
"to provide maximum current income consistent with the preservation of capital
and maintenance of liquidity, through investments in (i) U.S. dollar
denominated high quality commercial paper and other high quality short-term
obligations, including floating and variable rate master demand notes of U.S.
and foreign corporations; (ii) U.S. Dollar denominated obligations of foreign
governments and supranational agencies (e.g., the International Bank for
Reconstructions and Development); (iii) U.S. Dollar denominated obligations
issued or guaranteed by U.S. banks with total assets exceeding $1 billion and
by the 75 largest foreign commercial banks (including obligations of foreign
branches of such banks) in terms of total assets, or such other U.S. or
foreign commercial banks which are judged by the Fund's investment ad- viser
to meet comparable credit criteria; (iv) securities issued or guaranteed by
the U.S. Government or by agencies and instrumentality's thereof; and (v)
repurchase agreements."
Proposed Investment Objective
"to provide maximum current income consistent with the preservation of capital
and maintenance of liquidity."
As a non-fundamental policy, the Fund will seek to achieve its objective
"principally through investments in (i) U.S. dollar denominated quality
commercial paper and other high quality short-term obligations, including
floating and variable rate master demand notes of U.S. and foreign corporations;
(ii) U.S. Dollar denominated obligations of foreign governments and
supranational agencies (e.g., the International Bank for Reconstructions and
Development); (iii) U.S. Dollar denominated obligations issued or guaranteed
by U.S. banks with total assets exceeding $1 billion and by the 75 largest
foreign commercial banks (including obligations of foreign branches of such
banks) in terms of total assets, or such other U.S. or foreign commercial banks
which are judged by the Fund's investment adviser to meet comparable credit
criteria; (iv) securities issued or guaranteed by the U.S. Government or by
agencies and instrumentalities thereof; and (v) repurchase agreements."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Tax Free Income Fund
"to provide its shareholders with monthly dividends which are excluded from
gross income for federal income tax purposes as well as to protect the value
of its shareholders' investment by investing primarily (i.e., at least 80% of
its assets under normal conditions) in Municipal Obligations."
"to provide its shareholders with monthly dividends which are excluded from
gross income for federal income tax purposes as well as to protect the value
of its shareholders' investment."
As a non-fundamental policy, the Fund will seek to achieve its objective
"primarily (i.e., at least 80% of its assets under normal conditions) through
investment in Municipal Obligations."
Reason for the proposal: flexibility.
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Reasons for the Proposals Regarding the Investment Objectives
It is important to bear in mind that the proposed changes to the Funds'
investment objectives generally involve a judgment only as to what should
make up a Fund's fundamental investment objective, not a judgment as to what
investment strategies, policies or restrictions should be followed in
pursuing that objective. If shareholders approve this proposal, the Adviser
believes that the changes will have no immediate material effect on the way
in which the Funds are managed.
The reasons for the proposals set forth above, pertaining to the respective
investment objectives of the Funds, involve similar considerations. The
Trustees have reviewed the proposed changes and believe that they are in the
best interests of each Fund and its shareholders for the reason(s) indicated
above, and described in greater detail below. Each of the proposals has been
made for one or more of the following reasons: flexibility or clarification/
standardization. The following discussion provides greater detail as to what
is meant, in each case, by flexibility or clarification/ standardization.
Flexibility. Under the Trust's registration statement, the investment
objective of each Fund is fundamental and cannot be changed without a vote of
the "majority of the outstanding voting securities" of the relevant Fund. If
a Fund's stated investment objective contains details as to an investment
strategy to be pursued or an investment policy to be followed, or is
otherwise more restrictive than necessary, it may impose an unnecessarily
rigid restraint on management's ability to respond to certain regulatory
developments or changes in the financial markets. In order to make any
changes to a strategy or policy included as part of a Fund's investment
objective, the Fund would need shareholder approval, which is time consuming
and costly to the Fund and its shareholders. In each case, the Fund's most
basic investment objective (such as to achieve a high level of income) will
not change and will continue to be fundamental, but certain strategies or
policies which need not be part of the Fund's stated investment objective
will be made non- fundamental so that the Trustees may at a future date
receive and act upon recommendations of the Adviser to change these non-
fundamental policies without the necessity of a meeting of shareholders and
associated costs. In all cases described in the proposals above, the Adviser
does not anticipate that the changes will have an immediate effect on the
Fund's investment strategy, since there is no current intention of changing
stated strategy or policy. However, the Funds will have greater flexibility
to respond to future regulatory and market developments. If changes to non-
fundamental policies or restrictions are adopted by the Trustees in the
future, the Fund's prospectus and statement of additional information will be
amended to reflect any such changes and notice thereof will be provided to
shareholders.
Clarification/standardization. Some of the Funds' investment objectives
contain descriptive terms that are superfluous or ambiguous. Accordingly, the
Adviser has recommended to the Trustees, and the Trustees have approved, that
these Funds change the description of their investment objectives, where
appropriate, to eliminate any ambiguities. In addition, the terms used in
some of the Fund's investment objectives differ from the description of the
terms used in the stated investment objective of a similar Fund. The Adviser
has recommended, and the Trustees have approved, the standardization, to the
extent possible, of the description of an investment objective, or an aspect
thereof, as between Funds for which the investment objective or aspect
thereof is not intended to differ. By doing so, potential investors may be
expected to have a clearer understanding of the similarities or differences
in the investment objectives of the respective Funds.
Risk Factors: Because each of the proposals involves only a change to the
stated investment objective and is not expected to alter the fundamental
character of any Fund or any of their operations for the foreseeable future,
for each Fund, the adoption of the proposal is not expected to have any
effect on the risk factors to be considered in making or continuing an
investment in the Fund. In the future, however, the Board of Trustees may,
without shareholder approval, change a nonfundamental investment policy or
restriction in a way that may create more risk. The Fund will notify
shareholders of such changes. In addition, there is no assurance that the
Fund will achieve its investment objective, and the share price and total
return of each Fund other than the Vista Treasury Plus Money Market Fund,
Vista Federal Money Market Fund, Vista New York Tax Free Money Market Fund,
Vista Tax Free Money Market Fund, Vista U. S. Government Money Market Fund,
Vista Global Money Market Fund, and Vista Prime Money Market Fund will
fluctuate, so that an investment may be worth more or less than its original
cost upon redemption. With respect to the Money Market Funds, although the
Funds seek to maintain a stable net asset value per share, there can be no
guaranty that they in fact will be able to do so, so that an investment may
be worth more or less than its original cost upon redemption.
REQUIRED VOTE AND BOARD OF TRUSTEES'
RECOMMENDATION
The restatement of the fundamental investment objective of a Fund requires
the approval of a "majority of the outstanding securities" of the relevant
fund, which, for this purpose means the affirmative vote of the lessor of (1)
more than 50% of the outstanding shares of the Fund or (2) 67% or more of the
shares of the Fund present at the meeting if more than 50% of the outstanding
shares of the Fund are represented at the meeting in person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
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PROPOSAL 7
APPROVAL OR DISAPPROVAL OF AN AMENDMENT
TO THE CLASS A SHARES RULE 12b-1 DISTRIBUTION PLAN
This Proposal relates only to the Class A Shares of each Vista Tax Free
Income Fund, Vista New York Tax Free Income Fund and Vista California
Intermediate Tax Free Fund
Introduction
For purposes of this proxy and this Proposal, shares of the Vista California
Intermediate Tax Free Fund which are not designated as to class will be
considered Class A shares.
The Trustees of the Trust have adopted Distribution Plans for each of the
Class A shares of certain Funds (the "Distribution Plans") in accordance with
Rule 12b-1 under the 1940 Act, after having concluded that there is a
reasonable likelihood that the Distribution Plans will benefit the relevant
class and its shareholders.
The Proposed Form of the Class A Shares Rule 12b-1 Distribution Plan is
attached as Appendix E, and should be read in conjunction with the following.
Current Distribution Plans
The Trust has adopted separate plans of distribution pursuant to Rule 12b-1
under the 1940 Act (a "Distribution Plan") including several Distribution
Plans on behalf of Class A Shares of certain of the Funds, which provides
that each Fund shall pay a distribution fee (the "Basic Distribution Fee"),
including payments to the Distributor, shareholders servicing agents and
broker dealers, at an annual rate not to exceed 0.20% of its Shares' average
daily net assets for distribution services (exclusive of any expenses
incurred by such party in connection with print or electronic media
advertising). The recipient may use all or any portion of such Basic
Distribution Fee to pay for Fund expenses of printing prospectuses and
reports used for sales purposes, expenses of the preparation and printing of
sales literature and other such distribution-related expenses. The Fund is
also permitted to pay the Distributor an additional fee not to exceed 0.05%
per annum of its Shares' average daily net assets in anticipation of, or as
reimbursement for, expenses incurred in connection with print or electronic
media advertising for its shares.
Each Distribution Plan provides that it will continue in effect indefinitely
if such continuance is specifically approved at least annually by a vote of
both a majority of the Trustees and a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust and who have
no direct or indirect financial interest in the operation of the Distribution
Plan or in any agreement related to such Plan ("Qualified Trustees"). Each
Distribution Plan requires that the Trust shall provide to the Board of
Trustees, and the Board of Trustees shall review, at least quarterly, a
written report of the amounts expended (and the purposes therefor) under the
Distribution Plan. Each Distribution Plan further provides that the selection
and nomination of Qualified Trustees shall be committed to the discretion of
the disinterested Trustees (as defined in the 1940 Act) then in office. The
Distribution Plan may be terminated at any time by a vote of a majority of
the Qualified Trustees or by vote of a majority of the outstanding voting
Shares of a Fund (as defined in the 1940 Act). Each Distribution Plan may not
be amended to increase materially the amount of permitted expenses thereunder
without the approval of affected shareholders and may not be materially
amended in any case without a vote of the majority of both the Trustees and
the Qualified Trustees.
Since the Basic Distribution Fee is not directly tied to actual expenses, the
amount of Basic Distribution Fee paid by each of the Shares during any year
may be more or less than actual expenses incurred pursuant to the
Distribution Plan. For this reason, this type of distribution fee arrangement
is characterized by the staff of the SEC as being of the "compensation
variety" (in contrast to "reimbursement" arrangements, such as those
described above with respect to expenses incurred in connection with print or
electronic media advertising, by which the Distributors compensation is
directly linked to its expenses). However, the Shares are not liable for any
distribution expenses incurred in excess of the Basic Distribution Fee paid.
Management has proposed, and the Board of Trustees, including a majority of
the Qualified Trustees, has unanimously approved, a modification to the
Distribution Plans whereby the additional .05% fee be changed to a
"compensation" fee from a reimbursement fee.
The Adviser has studied the current distribution methods and believes that
the Basic Distribution Fees were low in comparison to other funds offered
through similar distribution channels. Therefore, the Adviser believes the
Funds are at a competitive disadvantage insofar as sales of Fund shares are
concerned. In addition, the Adviser has determined that amounts payable under
the Distribution Plans in a given year may not fully reimburse the
broker-dealer for its actual distribution-related expenses during such year.
The Adviser therefore recommended to the Trustees that they approve this
increase to the Distribution Fee to encourage broker-dealers in the sale of
Fund shares.
The table below sets forth the Distribution Plan fees paid for Class A Shares
of the relevant fund for the fiscal year ended August 31, 1995 pursuant to
the Current Distribution Plan.
<TABLE>
<CAPTION>
Distribution
Fees As a
Distribution % of Average
Fees Paid Net Assets
(After Waiver) (After Waiver)
-------------- --------------
<S> <C> <C>
Vista Tax Free Income Fund $179,192 0.20%
Vista New York Tax Free
Income Fund $205,755 0.20%
Vista California
Intermediate Tax Free Fund $ 6,404 0.02%
</TABLE>
REQUIRED VOTE AND BOARD OF TRUSTEES'
RECOMMENDATION
The approval of a modification to each Distribution Plan requires the
affirmative vote of a "majority of the outstanding voting securities" of the
affected class of shares of the relevant Fund, which for this purpose means
the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares of the Fund present at
the meeting if more than 50% of the outstanding shares of an affected class
of shares of the Fund are represented at the meeting in person or by proxy.
If the shareholders of a Fund do not approve the modification to its
Distribution Plan, such Fund will continue to make payments under the current
Distribution Plan.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
24
<PAGE>
PROPOSAL 8
APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN EACH
OF THE FUNDS AND THE CHASE MANHATTAN BANK N.A.
(AND THE SUCCESSOR ENTITY THERETO), AND A SUB-ADVISORY
AGREEMENT BETWEEN THE CHASE MANHATTAN BANK N.A. (AND THE
SUCCESSOR ENTITY THERETO) AND CHASE ASSET MANAGEMENT, INC.
This Proposal relates to all Funds other than the Vista Tax-Free Money Market
Fund and Vista Global Money Market Fund.
INTRODUCTION
The Chase Manhattan Bank, N.A., the current investment adviser of the Funds
(as used herein, the term "Chase" refers to The Chase Manhattan Bank, N.A.
and its successor in the Bank Merger, and the term "Adviser" means Chase
(including its successor in the Bank Merger) in its capacity as Adviser to
the Funds) recommended to the Board that the Trust enter into a new
Investment Advisory Agreement, on behalf of each Fund, and the Adviser (the
"New Advisory Agreement") effective as soon as practicable after the approval
of shareholders. The Adviser also recommended to the Board that the Adviser
be permitted to utilize the services of its wholly-owned subsidiary, Chase
Asset Management, Inc. ("CAM Inc."), to render advisory services to the
Funds. CAM Inc. is a registered investment adviser which was recently
incorporated for the purpose of rationalizing the delivery of investment
advisory services by Chase to its institutional clients. CAM Inc. will be
retained pursuant to a proposed Sub-Advisory Agreement (the "CAM Inc.
Agreement"). The Board has approved, and recommends that the shareholders of
each Fund approve, the New Advisory Agreement and CAM Inc. Agreement
(collectively, for purposes of this Proposal, the "Agreements"). In addition,
the Board of Trustees approved the continuation of the Agreements after the
Bank Merger, on the same terms and conditions as in effect immediately prior
to the merger (except for effective and termination dates) in the event the
Agreements are deemed to terminate as a result of the Bank Merger. Approval
of Proposal 8 will be deemed approval of such continuation of the Agreements
after the Bank Merger. If approved, the Agreements will become effective as
soon as practicable after the approval of shareholders.
No increase is proposed to the contractual fee rates under the New Advisory
Agreement and the Adviser, and not the Funds, will compensate CAM Inc. for
its services as Sub-Adviser. Therefore, the Funds will not bear any increase
in the contractual advisory fee rates resulting from the New Advisory
Agreement or CAM Inc. Agreement.
While the New Advisory Agreement is described below, the discussion is
qualified by the provisions of the complete agreement, a copy of which is
attached as Appendix B. If the shareholders of a Fund do not approve this
Proposal, then Chase will continue to act, commencing on the Holding Company
Merger, as the adviser to such Fund under the terms of the Interim Advisory
Agreement, assuming Proposal 1 is approved. If the Interim Advisory Agreement
is not approved by shareholders, the Board will consider the appropriate
course of action for the affected Fund or Funds. The New Advisory Agreement
should be read in conjunction with the following.
Background. In connection with the Mergers, New Chase intends to rationalize
its corporate wide investment management operations in order to more fully
take advantage of portfolio management skills that will exist within the
various corporate entities controlled by New Chase. As part of this
structuring, New Chase would like to consolidate its mutual fund supervisory
functions within one entity (Chase), and its portfolio management
responsibilities within another entity (CAM Inc.) (except with respect to the
Vista Tax-Free Money Market Fund and Vista Global Money Market where such
portfolio management responsibility will be consolidated within another
affiliate. See Proposal 9).
The Adviser also seeks to retain the ability to utilize portfolio managers
employed by the various investment management entities affiliated with the
Adviser through common ownership by New Chase. Thus, the New Advisory
Agreement would provide the Adviser with the ability to utilize the
specialized portfolio skills of employees of all its various affiliates,
thereby providing the Funds with greater opportunities and flexibility in
accessing investment expertise. For the foreseeable future, the Adviser would
employ certain members of the Adviser's senior management.
Similarities Between the Current and
New Advisory Agreements:
The New Advisory Agreement is similar in many respects to the Current
Advisory Agreement and Interim Advisory Agreement. The New Advisory Agreement
contains the material terms of the Current Advisory Agreement, but reflects
the proposed change of the investment adviser from The Chase Manhattan Bank,
N.A. to Chase and its successor entity, and incorporates additional
provisions designed to clarify and supplement the rights and obligations of
the parties.
Most importantly, the contractual rate at which fees are required to be paid
by each Fund for investment advisory services, as a percentage of average
daily net assets, will remain the same. Under the provisions of both the
Current and the New Advisory Agreements, each Fund is required to pay the
Adviser a monthly fee equal to a stated percentage per annum of its average
daily net assets. These amounts are set forth below under "Fees and Fee
Waivers." The following summarizes certain additional aspects of the Current
and New Advisory Agreements (collectively, the "Agreements") which are
materially the same in both Agreements:
In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties of the Adviser, the Adviser
shall not be liable to the Funds or to any shareholder for any losses that
may be sustained by the Funds in connection with its performance of the
Agreement.
The Adviser bears all expenses in connection with the performance of its
services under the Agreement. The Funds bear the expenses incurred in their
operations. Both agreements provide that the Adviser shall, at its expense,
provide the Funds with office space,
25
<PAGE>
furnishings and equipment and personnel required by it to perform the
services to be provided by the Adviser and that the Trust shall be
responsible for all of the Funds' expenses and liabilities.
Under the Agreement, if the aggregate expenses incurred by a Fund in any
fiscal year is in excess of the lowest applicable expense limitation imposed
by state securities laws or regulations thereunder, the Adviser shall reduce
its investment advisory fee, but not below zero, to the extent of its share
of such excess expenses; provided, however, that certain provided expenses
are specifically excluded from such calculation. No such reimbursement was
required during the Funds' most recent fiscal period.
A Fund may terminate the Agreement as to that Fund without penalty on not
more than 60 days' written notice when authorized by either a vote of
shareholders holding a "majority of the outstanding voting securities"
(within the meaning of the 1940 Act) of the Fund or by a vote of a majority
of the Trust's Board of Trustees. The Adviser may terminate the Agreement on
60 days' written notice to the Trust. The Agreement terminates in the event
of its assignment (as defined in the 1940 Act).
Differences Between the Current and
New Advisory Agreements:
The following highlights summarize some of the additional provisions which
are included in the New Advisory Agreement:
After the Bank Merger, the Chase Manhattan Bank, a New York State chartered
bank, the successor entity to The Chase Manhattan Bank, N.A., will be the
adviser to the Funds rather than The Chase Manhattan Bank, N.A., and will
continuously supervise the investment and reinvestment of cash, securities
and other property comprising the assets of the Funds. The Chase Manhattan
Bank, N.A. will be the Adviser to the Funds until the Bank Merger.
Details Regarding the Adviser's Duties. The New Advisory Agreement clearly
specifies the duties of the Adviser. For example, that the Adviser will be
required to obtain and evaluate pertinent data and other significant events
and developments which affect the economy, the Funds' investment programs,
the issuers of securities and the industries in which they engage, and
furnish a continuous investment program for each Fund. The Adviser will be
obligated to furnish such reports, evaluations, information or analyses to
the Trust as the Board may request, make recommendations to the Board with
respect to Trust policies, and carry out such policies as are adopted by the
Board.
Use of Affiliated Entities. The New Advisory Agreement clarifies that the
Adviser may render services through its own employees or the employees of one
or more affiliated companies that are qualified to act as an investment
adviser to the Trust under applicable laws and are under the common control
of New Chase as long as all such persons are functioning as part of an
organized group of persons, and such organized group of persons is managed at
all times by authorized officers of the Adviser. The Adviser will be as fully
responsible to the Trust for the acts and omissions of such persons as it is
for its own acts and omissions.
Use of a Sub-Adviser. The New Advisory Agreement clarifies that the Adviser
may from time to time employ or associate with such other entities or persons
(a "Sub-Adviser") as it believes appropriate to assist in the performance of
the New Advisory Agreement with respect to a particular Fund. However, the
Funds will not pay any additional compensation for any Sub-Adviser, and the
Adviser will be as fully responsible to the Trust for the acts and omissions
of the Sub-Adviser as it is for its own acts and omissions, and the Adviser
must review, monitor and report to the Board regarding the performance and
investment procedures of any Sub-Adviser. The proposed Sub-Advisory agreement
is discussed below under "Consideration and Proposal of the CAM Inc.
Agreement."
Brokerage Transactions. The New Advisory Agreement sets forth specific terms
as to brokerage transactions and the Adviser's use of broker-dealers. For
example, the Adviser will be obligated to use its best efforts to seek to
execute portfolio transactions at prices which, under the circumstances,
result in total costs or proceeds being the most favorable to the Funds. In
assessing the best overall terms available for any transaction, the Adviser
will consider all factors it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, research services provided
and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis.
"Soft Dollars." A provision of the New Advisory Agreement explicitly allows
the Adviser to select brokers or dealers who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Adviser, the Funds and/or the other
accounts over which the Adviser exercises investment discretion, and provides
that, notwithstanding the above, the Adviser may pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that the total commission
is reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Adviser with respect to
accounts over which it exercises investment discretion.
Aggregation of Orders. There is also a clarification of the authority of the
Adviser to aggregate the securities to be sold or purchased with those of
other Funds or its other clients if, in the Adviser's reasonable judgment,
such aggregation will result in an overall benefit to a Fund, taking into
consideration the advantageous selling or purchase price, brokerage
commission and other expenses, and trading requirements.
Other Clarifications. The New Advisory Agreement contains certain additional
provisions which are intended to clarify the status, rights or obligations of
the parties. For example, the Adviser is deemed to be an independent
contractor and the provisions of the Proposed Advisory Agreement are deemed
to apply to the Funds severally and not jointly.
Consideration and Proposal of the
CAM Inc. Agreement
It is being proposed that the Adviser be permitted to utilize the services of
CAM Inc. as a sub-adviser under a proposed Investment Sub-Advisory Agreement
(the "CAM Inc. Agreement") in order to enable the Adviser to more efficiently
render advisory services to each of the Funds.
The proposed form of the CAM Inc. Agreement is attached as Appendix C and
should be read in conjunction with the following.
The Adviser's decision to utilize the services of CAM Inc. in a sub- advisory
capacity was based on various considerations, including the Adviser's desire
to consolidate its asset management respon-
26
<PAGE>
sibilities, that the portfolio managers which currently manage the assets of
the Funds for the Adviser will also manage the Funds as employees of CAM
Inc., that CAM Inc. provides a wide range of investment management
capabilities, including the ability to discriminate among a wide range of
potential investments as part of an investment program for each of the Funds,
that risk control is integral to its methodology, and the attractiveness of
the fee structure and estimated transaction costs that would be incurred.
Based upon the foregoing, the Adviser recommended to the Board of Trustees
that, subject to approval by the Board and such Funds' shareholders of the
New Advisory Agreement and the CAM Inc. Agreement, the Adviser enter into the
CAM Inc. Agreement with CAM Inc. In considering whether to recommend that the
CAM Inc. Agreement be approved by shareholders, the Board requested and
evaluated various information from the Adviser and CAM Inc. relevant to the
Adviser's decision. In addition, the Board considered various other factors
which it deemed to be relevant, including, but not limited to, the fact that
the managers of each Fund will continue to manage the assets of the Funds as
employees of CAM Inc., capabilities to be provided by CAM Inc., the stability
of its investment staff, the trading systems to be utilized and the potential
to minimize transaction costs, the ability to customize portfolios for the
Funds, and the Adviser's access to the various investment and research
resources of CAM Inc.
Description of the Proposed CAM Inc. Agreement
The proposed arrangement between the Adviser and CAM Inc. under the CAM Inc.
Agreement would enable the Adviser to manage the investment activities of the
Funds covered in the CAM Inc. Agreement most effectively by delegating to CAM
Inc. portfolio management duties relating to transactions in the securities
held by such Funds. With respect to the day to day management of the Funds
under the CAM Inc. Agreement, CAM Inc. would make decisions concerning, and
place all orders for, purchases and sales of securities and help maintain the
records relating to such purchases and sales. CAM Inc. may, in its
discretion, provide such services through its own employees or the employees
of one or more affiliated companies that are qualified to act as an
investment adviser to the Trust under applicable laws and are under the
common control of New Chase; provided that (i) all persons, when providing
services under the CAM Inc. Agreement, are functioning as part of an
organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of CAM Inc.
The Adviser and CAM Inc. would bear all expenses in connection with the
performance of their respective services and the services under the CAM Inc.
Agreement.
As investment adviser, the Adviser would oversee the management of the Funds
under the CAM Inc. Agreement, and, subject to the general supervision of the
Board of Trustees, would make recommendations and provide guidelines to CAM
Inc. based on general economic trends and macroeconomic factors. Among the
recommendations which may be provided by the Adviser to CAM Inc. would be
guidelines and benchmarks against which the Funds would be managed. From the
fee paid by the Funds under the New Advisory Agreement to the Adviser, the
Adviser will bear responsibility for payment of sub-advisory fees to CAM Inc.
Therefore, the Funds would not bear any increase in contractual advisory fee
rates resulting from the New Advisory Agreement and the CAM Inc. Agreement.
The Board of Trustees of the Trust, including a majority of the Trustees who
are not interested persons of the Funds, the Adviser or CAM Inc., unanimously
approved the CAM Inc. Agreement at a meeting held on December 14, 1995. If
approved by shareholders, unless sooner terminated, the CAM Inc. Agreement
will remain in effect for two years and will thereafter continue for
successive one-year periods, provided that such continuation is specifically
approved at least annually by the Board of Trustees, or by the vote of a
"majority of the outstanding voting securities" of the Funds under the CAM
Inc. Agreement as defined under the 1940 Act and, in either case, by a
majority of the Disinterested Trustees who are not interested persons of the
Adviser or CAM Inc., by vote cast in person at a meeting called for such
purpose. The CAM Inc. Agreement is terminable at any time, without penalty,
by vote of the Board of Trustees, by the Adviser, by the vote of "a majority
of the outstanding voting securities" of the Funds under the CAM Inc.
Agreement, or by CAM Inc., upon 60 days' written notice. The CAM Inc.
Agreement will terminate automatically in the event of its assignment, as
defined under the 1940 Act.
In the event that both the New Advisory Agreement and the CAM Inc. Agreement
are not approved by shareholders of any Fund, neither the New Advisory
Agreement nor the CAM Inc. Agreement will be implemented for such Funds, and
the Interim Advisory Agreement between such Funds and the Adviser will remain
in effect. If the Interim Advisory Agreement is not approved by shareholders,
the Board will consider the appropriate course of action for the Funds.
Information About Chase Asset Management, Inc.
Chase Asset Management, Inc. was organized as a Delaware corporation on
September 1, 1995 and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended. CAM Inc. is a wholly owned
subsidiary of The Chase Manhattan Bank, N.A., which is a wholly owned
subsidiary of The Chase Manhattan Corporation. After the completion of the
mergers, CAM Inc. will continue to be a wholly-owned subsidiary of the
Adviser which will be a wholly-owned subsidiary of New Chase. CAM Inc. is
registered with the Commission as an investment adviser and was formed for
the purpose of providing discretionary investment advisory services to
institutional clients and to consolidate Chase's investment management
function. Information about the Adviser and its affiliates is set forth
above.
The principal executive officers and Directors of CAM Inc. are as follows:
James W. Zeigon, Director and Chairman of the Board. Mr. Zeigon is also an
Executive Vice President of the Chase Manhattan Bank, N.A.
Mark R. Richardson, Director, President and Chief Investment Officer. Mr.
Richardson is also a Managing Director of the Chase Manhattan Bank, N.A.
Stephen E. Prostano, Director, Executive Vice President and Chief Operating
Officer. Mr. Prostano is also a Managing Director of the Chase Manhattan
Bank, N.A.
The business address of each of the foregoing individuals is 1211 Avenue of
the Americas, New York, New York 10036.
27
<PAGE>
BOARD CONSIDERATIONS
In considering whether to recommend that the New Advisory Agreement and CAM
Inc. Agreement be approved by shareholders, the Board considered the nature
and quality of services to be provided by the Adviser and CAM Inc. and
comparative data as to advisory fees and expenses, and the Board requested
and evaluated such other information from Chase and Chemical which the Board
deemed to be relevant, including, but not limited to, the Adviser's ability
to select and utilize portfolio managers from its affiliates; that the rate
at which advisory fees will initially be paid to the Adviser would be
identical to the rate at which fees are now paid; and that the New Advisory
Agreement would include certain provisions designed to modernize the terms of
the agreement and reflect regulatory developments, such as those concerning
"soft dollars" and aggregation of orders under regulations and releases
recently issued by the SEC.
The Board, including a majority of the Trustees who are not interested
persons of the Funds or the Adviser ("Disinterested Trustees"), unanimously
approved the New Advisory Agreement and CAM Inc. Agreement at a meeting held
on December 14, 1995.
FEES AND FEE WAIVERS
Under the Current Advisory Agreements, which are dated August 23, 1994 for
each of the Funds except for Vista Treasury Money Market Fund and Vista
Federal Money Market Fund, which are dated April 15, 1994, each Fund pays the
Adviser (and under the New and Proposed Advisory Agreements, each Fund would
pay the Adviser) a fee, computed daily and paid monthly, at the annual rates
set forth below as a percentage of average daily net assets:
<TABLE>
<CAPTION>
Name of Fund Fee
- ---------------------------------------------
<S> <C>
Vista Treasury Plus Money Market .10%
Vista Federal Money Market .10
Vista New York Tax Free Money Market .10
Vista California Tax Free Money Market .10
Vista U.S. Government Money Market .10
Vista Prime Money Market .10
Vista California Immediate Tax Free .30
Vista New York Tax Free Income .30
Vista Tax Free Income .30
</TABLE>
Under the Current Advisory Agreement, the Interim Advisory Agreement and New
Advisory Agreement, the Adviser may periodically reduce all or a portion of
its advisory fee with respect to any Fund. In the fiscal year ended August
31, 1995, the Adviser accrued aggregate investment advisory fees, and the
Adviser waived such fees with respect to each Fund as follows:
<TABLE>
<CAPTION>
Fees Amount of
Name of Fund Earned Fee Waiver*
- -----------------------------------------------------
<S> <C> <C>
Vista Treasury Plus Money $ 22,663 $22,663
Market
Vista Federal Money 389,075 118,975
Market
Vista New York Tax Free 381,647 0
Money Market
Vista California Tax Free $ 55,870 $ 44,112
Money Market
Vista U.S. Government 1,440,186 0
Money Market
Vista Prime Money Market 352,679 216,306
Vista California 102,004 102,004
Immediate Tax Free
Vista New York Tax Free 333,493 219,772
Income
Vista Tax Free Income 307,093 287,095
</TABLE>
Chase also serves as the Administrator to each Fund. For the fiscal year
ended August 31, 1995, Chase accrued administration fees, and waived such
fees with respect to each Fund, as follows:
<TABLE>
<CAPTION>
Fees Amount of
Name of Fund Earned Fee Waiver*
- ------------------------- --------- ------------
<S> <C> <C>
Treasury Plus Money $ 11,331 $11,331
Market
Federal Money Market 194,538 61,243
New York Tax Free Money 190,823 0
Market
California Tax Free Money 21,527 27,935
Market
U.S. Government Money 720,693 0
Market
Prime Money Market 176,340 88,982
Vista California 34,001 34,001
Immediate Tax Free
Vista New York Tax Free 111,164 81,265
Income
Vista Tax Free Income 102,364 64,572
</TABLE>
- --------------
*This voluntary waiver and/or limitation is currently in effect but may be
terminated.
ADDITIONAL INFORMATION
Additional information concerning the Adviser, the Administrator and the
Sub-Administrator is set forth under "Additional Information" under Proposal 1.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of the New Advisory Agreement and CAM Inc. Agreement will require
the affirmative vote of a "majority of the outstanding voting securities" of
the relevant Fund, which for this purpose means the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of such Fund or (2) 67%
or more of the shares of such Fund present at the meeting if more than 50% of
the outstanding shares of such Fund are represented at the meeting in person
or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
28
<PAGE>
PROPOSAL 9
APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN
EACH FUND AND THE CHASE MANHATTAN BANK, N.A. (AND
THE SUCCESSOR ENTITY THERETO), AND A SUB-ADVISORY
AGREEMENT BETWEEN THE CHASE MANHATTAN BANK, N.A.
(AND THE SUCCESSOR ENTITY THERETO) AND TEXAS
COMMERCE BANK, NATIONAL ASSOCIATION
This Proposal relates to the Vista Tax-Free Money Market Fund and Vista
Global Money Market Fund only.
INTRODUCTION
The Chase Manhattan Bank, N.A., the current investment adviser of the Funds
(as used herein, the term "Chase" refers to The Chase Manhattan Bank, N.A.
and its successor in the Bank Merger, and the term "Adviser" means Chase
(including its successor in the Bank Merger) in its capacity as Adviser to
the Funds) recommended to the Board that the Trust enter into a new
Investment Advisory Agreement, on behalf of each of the Vista Tax Free Money
Market Fund and Vista Global Money Market Fund (collectively, for purposes of
this proposal, the "Funds"), and the Adviser (the "New Advisory Agreement")
effective as soon as practicable after the approval of shareholders. The
Adviser also recommended to the Board that the Adviser be permitted to
utilize the services of an affiliate of the Adviser, Texas Commerce Bank,
National Association ("TCB"), to render advisory services to the Funds. TCB
will be retained pursuant to a proposed Sub-Advisory Agreement (the "TCB
Agreement"). The Board has approved, and recommends that the shareholders of
each Fund approve, the New Advisory Agreement and TCB Agreement
(collectively, for purposes of this Proposal, the "Agreements"). In addition,
the Board of Trustees approved the continuation of the Agreements after the
Bank Merger, on the same terms and conditions as in effect immediately prior
to the merger (except for effective and termination dates) in the event the
Agreements are deemed to terminate as a result of the Bank Merger. Approval
of Proposal 9 will be deemed approval of such continuation of the Agreements
after the Bank Merger.
TCB presently serves as adviser to the Tax Free Money Market Fund and The
Cash Management Fund series of The Hanover Funds, Inc. In connection with the
Holding Company Merger, it has been proposed to merge the Tax Free Money
Market Fund and The Cash Management Fund series of The Hanover Funds, Inc.
into the Vista Tax Free Money Market Fund and Vista Gl obal Money Market
Fund, respectively, subject to approval by Hanover shareholders. After such
mergers, it has been proposed to retain TCB as the sub- adviser to the Vista
Global Money Market Fund and Vista Tax Free Money Market Fund. If approved,
the New Advisory Agreement will become effective as soon as practicable upon
the approval of shareholders and the TCB Agreement will become effective upon
the merger of such Funds. The Adviser will manage each Fund until the TCB
Agreement becomes effective.
No increase to the contractual fee rates is proposed under the New Advisory
Agreement and the Adviser, and not the Funds, will compensate TCB for its
services as Sub-Adviser. Therefore, the Funds will not bear any increase in
contractual fee rates resulting from the New Advisory Agreement or the TCB
Agreement.
New Advisory Agreement. The New Advisory Agreement is, in all material
respects, exactly the same as the New Advisory Agreement discussed under
Proposal 8 (and a copy of which is attached as Appendix B). Therefore, for a
discussion of the relative similarities and differences between the Current
and New Agreements and other material information, please see Proposal 8. If
the shareholders of a Fund do not approve this Proposal, then Chase will
continue to act, commencing on the Holding Company Merger, as the adviser to
such Fund under the terms of the Interim Advisory Agreement, assuming
Proposal 1 is approved. If the Interim Advisory Agreement is not approved by
shareholders, the Board will consider the appropriate course of action for
the affected Fund or Funds.
Background. In connection with the Mergers, New Chase intends to rationalize
its corporate wide investment management operations in order to more fully
take advantage of portfolio management skills that will exist within the
various corporate entities controlled by New Chase. As part of this
structuring, New Chase would like to consolidate its mutual fund supervisory
functions within one entity (Chase), and its portfolio management
responsibilities with respect to the Funds within another entity (TCB). Thus,
the New Advisory Agreement would provide the Adviser with the ability to
utilize the specialized portfolio skills of employees of all its various
affiliates, thereby providing the Funds with greater opportunities and
flexibility in accessing investment expertise. For the foreseeable future,
the Adviser would employ certain members of the Adviser's senior management.
Consideration and Proposal of the TCB Agreement
It is being proposed that the Adviser be permitted to utilize the services of
TCB as a sub-adviser under a proposed Investment Sub- Advisory Agreement (the
"TCB Agreement") in order to enable the Adviser to more efficiently render
advisory services to the Funds. The proposed form of the TCB Agreement is
attached as Appendix D and should be read in conjunction with the following.
The Advisers' decision to utilize the services of TCB in a sub- advisory
capacity with respect to the Funds was based on various considerations,
including the Adviser's desire to consolidate its asset management
responsibilities, that TCB provides a wide range of investment management
capabilities, including the ability to discriminate among a wide range of
potential investments as part of an investment program for each of the Funds,
that risk control is integral to its methodology, that it has shown a
relative consistency in investment management performance, and the
attractiveness of the fee structure and estimated transaction costs that
would be incurred.
Based upon the foregoing, the Adviser recommended to the Board of Trustees
that, subject to approval by the Board and such Funds' shareholders of the
New Advisory Agreement and the TCB Agreement, the Adviser enter into the TCB
Agreement with TCB. In considering whether to recommend that the TCB
Agreement be approved by shareholders, the Board requested and evaluated
various information from the Advisers and TCB relevant to the Advis-
29
<PAGE>
ers' decision. In addition, the Board considered various other factors which
it deemed to be relevant, including, but not limited to, the fact that TCB
presently manages similar funds which will be merged into the Funds,
capabilities to be provided by TCB, the stability of its investment staff,
the trading systems to be utilized and the potential to minimize transaction
costs, the ability to customize portfolios for the Funds, TCB's experience as
an investment adviser, and the Adviser's access to the various investment and
research resources of TCB.
Description of the TCB Agreement
The proposed arrangement between the Adviser and TCB under the TCB Agreement
would enable the Adviser to manage the investment activities of the Funds
covered in the TCB Agreement most effectively by delegating to TCB portfolio
management duties relating to transactions in the securities held by such
Funds. With respect to the day to day management of the Funds under the TCB
Agreement, TCB would make decisions concerning, and place all orders for,
purchases and sales of securities and help maintain the records relating to
such purchases and sales. TCB may, in its discretion, provide such services
through its own employees or the employees of one or more affiliated
companies that are qualified to act as an investment adviser to the Trust
under applicable laws and are under the common control of New Chase; provided
that (i) all persons, when providing services under the TCB Agreement, are
functioning as part of an organized group of persons, and (ii) such organized
group of persons is managed at all times by authorized officers of TCB.
The Advisers and TCB would bear all expenses in connection with the
performance of their respective services and the services under the TCB
Agreement.
As investment adviser, the Adviser would oversee the management of the Funds
under the TCB Agreement and, subject to the general supervision of the Board
of Trustees, would make recommendations and provide guidelines to TCB based
on general economic trends and macroeconomic factors. Among the
recommendations which may be provided by the Adviser to TCB would be
guidelines and benchmarks against which the Funds would be managed. From the
fee paid by the Funds under the New Advisory Agreement to the Adviser, the
Adviser will bear responsibility for payment of sub-advisory fees to TCB.
Therefore, the Funds would not bear any increase in fees resulting from the
New Advisory Agreement and the TCB Agreement.
The Board of Trustees of the Trust, including a majority of the Trustees who
are not interested persons of the Funds, the Adviser or TCB, unanimously
approved the TCB Agreement at a meeting held on December 14, 1995. If
approved by shareholders, unless sooner terminated, the TCB Agreement will
remain in effect for two years and will thereafter continue for successive
one-year periods, provided that such continuation is specifically approved at
least annually by the Board of Trustees, or by the vote of a "majority of the
outstanding voting securities" of the Funds under the TCB Agreement as
defined under the 1940 Act and, in either case, by a majority of the
Disinterested Trustees who are not interested persons of the Adviser or TCB,
by vote cast in person at a meeting called for such purpose. The TCB
Agreement is terminable at any time, without penalty, by vote of the Board of
Trustees, by the Advisers, by the vote of "a majority of the outstanding
voting securities" of the Funds under the TCB Agreement, or by TCB, upon 60
days' written notice. The TCB Agreement will terminate automatically in the
event of its assignment, as defined under the 1940 Act.
In the event that both the New Advisory Agreement and the TCB Agreement are
not approved by shareholders of any Fund, neither the New Advisory Agreement
nor the TCB Agreement will be implemented for such Funds, and the Interim
Advisory Agreement between such Funds and the Adviser will remain in effect.
If the Interim Advisory Agreement is not approved by shareholders, the Board
will consider the appropriate course of action.
Information About Texas Commerce Bank,
National Association
Texas Commerce Bank, National Association is a national banking association
organized under the laws of the United States. TCB is a wholly owned
subsidiary of Chemical Banking Corporation and will remain a wholly owned
subsidiary of New Chase. Information about the Adviser and its affiliates is
set forth above.
The principal executive officers and trustees of TCB are as follows:
John L. Adams, Vice Chairman and Director.
E. William Barnett, Director. Mr Barnett is also Managing Partner of Baker &
Botts, L.L.P.
David W. Blegler, Director. Mr. Blegler is also Chairman, President and Chief
Executive Officer of ENSERCH Corporation.
Jack S. Blanton, Sr., Director. Mr. Blanton is also President and Chief
Executive Officer of Eddy Refining Company.
Alan R. Buckwalter, III, Vice Chairman and Director.
Philip J. Burguieres, Director. Mr. Burguieres is also Chairman, President
and Chief Executive Officer of Weatherford International Inc.
Lic. Eugenio Clariond Reyes, Director. Mr. Reyes is also Director General of
Grupo IMSA, S.A. de C.V.
William T. Dillard, II, Director. Mr. Dillard is also President and Chief
Operating Officer of Dillard Department Stores, Inc.
Charles W. Duncan, Jr., Director.
John H. Duncan, Director.
Gerald R. Ford, Director. Mr. Ford was also the 38th President of the United
States.
Dr. Juliet V. Garcia, Director. Dr. Garcia is also President of the
University of Texas at Brownsville.
Dennis R. Hendrix. Director. Mr. Hendrix is also Chairman of the PanEnergy
Corporation.
Forrest E. Hoglund, Director. Mr. Hoglund is also Chairman and Chief
Executive Officer of Enron Oil & Gas Company.
Harold S. Hook, Director. Mr. Hook is also Chairman and Chief Executive
Officer of the American General Corporation.
Ray L. Hunt, Director. Mr. Hunt is also Chairman, President and Chief
Executive Officer of the Hunt Oil Company.
Woody L. Hunt, Director. Mr. Hunt is also Chairman and Chief Executive
Officer of the Hunt Building Corporation.
Robert C. Hunter, Vice Chairman and Director.
Alphonso R. Jackson, Director. Mr. Jackson is also President and Chief
Executive Officer of the Dallas Housing Authority.
30
<PAGE>
Don D. Jordan, Director. Mr. Jordan is also Chairman and Chief Executive
Officer of Houston Industries, Inc.
Herbert D. Kelleher, Director. Mr. Kelleher is also Chairman, President and
Chief Executive Officer of Southwest Airlines.
James C. Kennedy, Director. Mr. Kennedy is also Chairman and Chief Executive
Officer of Cox Enterprises, Inc.
Joe Bob Kinsel, Jr., Director. Mr. Kinsel is also President of Kinsel Motors,
Inc.
R. Bruce LaBoon, Director. Mr. LaBoon is also Managing Partner of Liddell,
Sapp, Zivley, Hill & LaBoon, L.L.P.
Ben F. Love, Director. Mr. Love is also a retired Chairman and Chief
Executive Officer of Texas Commerce Bankshares, Inc.
R. Drayton McLane, Jr., Director. Mr. McLane is also the Owner of the Houston
Astros Professional Baseball Team.
Edward D. Miller, Director. Mr. Miller is also Senior Vice Chairman of Chase
Manhattan Corporation.
Robert A. Mosbacher, Sr., Director. Mr. Mosbacher is also Chairman of
Mosbacher Energy Company.
Constantine S. Nicandros, Director. Mr. Nicandros is also a retired President
and Chief Executive Officer of Conoco, Inc.
Robert R. Onstead, Director. Mr. Onstead is also Chairman and Chief Executive
Officer of Randall's Food Markets, Inc.
Lawrence G. Rawl, Director. Mr. Rawl is also a retired Chairman and Chief
Executive Officer of the Exxon Corporation.
J. Hugh Roff, Jr., Director. Mr. Roff is also Chairman of the Board of
PetroUnited Terminals, Inc.
Wayne R. Sanders, Director. Mr. Sanders is also Chairman and Chief Executive
Officer of the Kimberly-Clark Corporation.
Marc J. Shapiro, Chairman, President, Chief Executive Officer and Director.
Walter V. Shipley, Director. Mr. Shipley is also Chairman and Chief Executive
Officer of the Chemical Banking Corporation.
Cyril Wagner, Jr., Director. Mr. Wagner is also an Oil and Gas Producer.
Isabel Brown Wilson, Director. Ms. Wilson is also Chairman of The Brown
Foundation.
William A. Wise, Director. Mr. Wise is also Chairman, President and Chief
Executive Officer of the El Paso Natural Gas Company.
The business address of each of the foregoing individuals is
P.O. Box 2558 Houston, Texas 77252
The other mutual funds for which TCB serves as adviser and their assets as of
December 31, 1995, are:
<TABLE>
<CAPTION>
Total Assets
as of
12/31/95 (in
The Hanover Investment Funds, Inc. Fee Millions)
- -----------------------------------------------------------
<S> <C> <C>
Hanover Short Term U.S.
Government Fund 0.35% $9.738
The Hanover Funds, Inc.
- ----------------------
Hanover Cash Management Fund 0.15 1,330
Hanover Tax Free Money Market
Fund 0.15% $ 320
</TABLE>
<TABLE>
<CAPTION>
Total Assets
as of 12/31/95
AVESTA TRUST (in Thousands)
- ---------------------------------------------
<S> <C>
Equity Growth Fund $45,578
Equity Income Fund 54,985
Balanced Fund 21,471
Income Fund 57,452
Core Equity Fund 24,367
Small Capitalization Fund 12,848
Short-Intermediate Term
U.S. Government
Securities Fund 28,783
U.S. Government Securities
Fund 2,877
Intermediate Term Bond Fund 5,031
Risk Manager-Income 5,369
Risk Manager-Balanced 5,917
Risk Manager-Growth 2,390
Money Market Fund 71,310
</TABLE>
<TABLE>
<CAPTION>
Fee
-----------------------
First Next Over
AVESTA TRUST $250M $250M $500M
- -----------------------------------------------------
<S> <C> <C> <C>
Equity Growth Fund 1.00% 0.90% 0.80%
Equity Income Fund 1.00 0.90 0.80
Balanced Fund 1.00 0.90 0.80
Income Fund 1.00 0.90 0.80
Core Equity Fund 1.00 0.90 0.80
Small Capitalization Fund 1.15 1.05 0.95
Short-Intermediate Term
U.S. Government
Securities Fund 0.75 0.65 0.55
U.S. Government Securities
Fund 0.75 0.65 0.55
Intermediate Term Bond Fund 0.75 0.65 0.55
Risk Manager-Income 1.10 1.00 0.90
Risk Manager-Balanced 1.10 1.00 0.90
Risk Manager-Growth 1.10 1.00 0.90
Money Market Fund 0.65 0.65 0.65
</TABLE>
BOARD CONSIDERATIONS
In considering whether to recommend that the New Advisory Agreement and TCB
Agreement be approved by shareholders, the Board considered the nature and
quality of services to be provided by the Adviser and TCB and comparative
data as to advisory fees and expenses, and the Board requested and evaluated
such other information from Chase and TCB which the Board deemed to be
relevant, including, but not limited to, the Adviser's ability to select and
utilize portfolio managers from its affiliates, that TCB presently advises
portfolios with similar objectives which will be merged into the Funds,
thereby ensuring continuity in management; that the rate at which advisory
fees will initially be paid to the Adviser would be identical to the rate at
which fees are now paid; and that the New Advisory Agreement would include
certain provisions designed to modernize the terms of the agreement and
31
<PAGE>
reflect regulatory developments, such as those concerning "soft dollars" and
aggregation of orders under regulations and releases recently issued by the
SEC.
The Board, including a majority of the Trustees who are not interested
persons of the Funds or the Adviser, unanimously approved the New Advisory
Agreement and TCB Agreement at a meeting held on December 14, 1995.
FEES AND FEE WAIVERS
Under the Current Advisory Agreement, which is dated August 23, 1994 and was
last approved by each Fund's sole shareholder on August 25, 1994, each Fund
pays the Adviser (and under the New Advisory Agreement, each Fund would pay
the Adviser) a fee, computed daily and paid monthly, at the annual rates set
forth below as a percentage of average daily net assets:
<TABLE>
<CAPTION>
Name of Fund Fee
- -----------------------------------
<S> <C>
Vista Tax Free Money Market .10%
Vista Global Money Market .10
</TABLE>
Under the Current Advisory Agreement, the Interim Advisory Agreement And New
Advisory Agreement, the Adviser may periodically reduce all or a portion of
its advisory fee with respect to any Fund. In the fiscal period ended August
31, 1995, the Funds paid to the Adviser aggregate investment advisory fees,
and the Adviser waived its fees and/or reimbursed expenses to each Fund, as
follows:
<TABLE>
<CAPTION>
Amount of
Fee Waiver
and/or
Expense
Fees Reimburse-
Name of Fund Paid ment*
- ---------------------------------------------------
<S> <C> <C>
Vista Tax Free Money $ 440,282 $ 0
Market
Vista Global Money 1,076,339 361,108
Market
</TABLE>
Chase also serves as the Administrator to each Fund. For the fiscal year
ended August 31, 1995, Chase received fees, and waived its fees and/or
reimbursed expenses to each Fund, as follows:
<TABLE>
<CAPTION>
Amount of
Fee Waiver
and/or
Expense
Fees Reimburse-
Name of Fund Paid ment*
- ---------------------------------------------------
<S> <C> <C>
Vista Tax Free Money $220,141 $ 0
Market Fund
Vista Global Money 538,164 173,322
Market Fund
</TABLE>
- -----------
* This voluntary waiver and/or limitation is currently in effect but may be
terminated.
ADDITIONAL INFORMATION
Additional information concerning the Adviser, the Administrator and the
Sub-Administrator is set forth under "Additional Information" under Proposal 1.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of the New Advisory Agreement and TCB Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
relevant Fund, which for this purpose means the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of such Fund or (2) 67%
or more of the shares of such Fund present at the meeting if more than 50% of
the outstanding shares of such Fund are represented at the meeting in person
or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
OTHER INFORMATION
The Fund's present Sub-Administrator is Vista Broker Dealer Services, Inc.
("VBDS"), a wholly-owned subsidiary of BISYS Funds Services, Inc. See
"Administrator" under Proposal 1. The following are officers of the Trust who
may be deemed to have an interest in VBDS by virtue of their status as
employees and/or executive officers of VBDS:
<TABLE>
<CAPTION>
Position Officer of
With the the Trust
Name Trust Age Since
- ---------------------------------------------------------------
<S> <C> <C> <C>
Ann Bergin Secretary and 35 1995
Assistant Treasurer
Martin R. Dean Treasurer and 31 1995
Assistant Secretary
</TABLE>
Substantial Shareholders. As of the Record Date, the Trust believed that the
following persons beneficially owned more than 5% of the Funds:
Vista Global Money Market Fund--Vista Class Shares
<TABLE>
<CAPTION>
Percentage of
Number of Class
Name Shares Owned Outstanding
- -----------------------------------------------------------
<S> <C> <C>
Nysernet Inc. 6,178,032.200 6%
200 Elwood Davis Road
Suite 103
Liverpool, NY 13088
Croydon Company Inc. 5,175,151.000 5%
7272 Morgan Road
Liverpool, NY 13090
</TABLE>
32
<PAGE>
Vista Global Money Market Fund--Institutional Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- --------------------------------------------------------------
<S> <C> <C>
Citadel Holding Corp. 14,043,527.560 5%
550 South Hope Street
Los Angeles, CA 90210
Continental Micronesia Inc. 13,925,000.000 5%
P.O. Box 8778T
Taminung, GU 96931
Manhattan Prepaid Health 13,734,633.730 5%
Service Plan, Inc.
475 Riverside Drive
New York, NY 10115
Continental Airways Inc. 33,220,000.000 12%
2929 Allen Parkway
Houston, Texas 77019
Carriers ILA CFS Trust Fund. 21,348,507.460 8%
One Evertrust Plaza
Jersey City, NJ 07302
Associated Food Stores LLC 13,060,585.860 5%
122-20 Merrick Blvd.
Jamaica, NY 11434
</TABLE>
Vista Treasury Plus Money Market Fund--
Premier Shares
<TABLE>
<CAPTION>
Percentage of
Number of Class
Name Shares Owned Outstanding
- ---------------------------------------------------------
<S> <C> <C>
Phototronics 5,447,872.460 8%
Incorporated
15 Sector Road
Brookfield, CT 06804
</TABLE>
Vista Treasury Plus Money Market Fund--
Institutional Shares
<TABLE>
<CAPTION>
Percentage of
Number of Class
Name Shares Owned Outstanding
- -------------------------------------------------------------------
<S> <C> <C>
Trenwick America 4,105,303.360 6%
Reinsurance Corp.
Metro Center One Station Place
Stamford, CT 06902
Michigan Strategic Fund 3,375,201.370 5%
Great Lakes Pulp & Fiber Inc.
Indenture dated A/O Dec. 1 94
4 Chase Metrotech Center
Brooklyn, NY 11245
</TABLE>
Vista Federal Money Market Fund--Institutional Shares
<TABLE>
<CAPTION>
Percentage of
Number of Class
Name Shares Owned Outstanding
- ------------------------------------------------------------------
<S> <C> <C>
Health Management Systems, Inc. 7,661,312.190 6%
401 Park Avenue South
New York, NY 10016-8808
</TABLE>
Vista Tax Free Money Market Fund--Institutional Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- ------------------------- ----------- -------------
<S> <C> <C>
Parfums De Coeur LTD 13,012,643.790 6%
85 Old Kings Highway N.
Darien, CT 06820-4724
</TABLE>
Voting Information and Discretion of the Persons Named as Proxies. While the
Meeting is called to act upon any other business that may properly come
before it, at the date of this proxy statement the only business which the
management intends to present or knows that others will present is the
business mentioned in the Notice of Meeting. If any other matters lawfully
come before the Meeting, and in all procedural matters at the Meeting, it is
the intention that the enclosed proxy shall be voted in accordance with the
best judgment of the attorneys named therein, or their substitutes, present
and acting at the Meeting.
If at the time any session of the Meeting is called to order a quorum is not
present, in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In
the event that a quorum is present but sufficient votes in favor of one or
more of the proposals have not been received, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the Shares
present in person or by proxy at the session of the Meeting to be adjourned.
The persons named as proxies will vote those proxies which they are entitled
to vote in favor of the proposal, in favor of such an adjournment, and will
vote those proxies required to be voted against the proposal, against any
such adjournment. A vote may be taken on one or more of the proposals in this
proxy statement prior to any such adjournment if sufficient votes for its
approval have been received and it is otherwise appropriate.
Submission of Proposals for the Next Annual Meeting of the Trust. Under the
Trust's Declaration of Trust and By-Laws, annual meetings of shareholders are
not required to be held unless necessary under the 1940 Act (for example,
when fewer than a majority of the Trustees have been elected by
shareholders). Therefore, the Trust does not hold shareholder meetings on an
annual basis. A shareholder proposal intended to be presented at any meeting
hereafter called should be sent to the Trust at 125 West 55th Street, New
York, New York 10019, and must be received by the Trust within
33
<PAGE>
a reasonable time before the solicitation relating thereto is made in order
to be included in the notice or proxy statement related to such meeting. The
submission by a shareholder of a proposal for inclusion in a proxy statement
does not guarantee that it will be included. Shareholder proposals are
subject to certain regulations under federal securities law.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS
NECESSARY.
February 12, 1996
BY ORDER OF THE BOARD OF TRUSTEES
OF MUTUAL FUND TRUST
/s/ Ann Bergin
Ann Bergin,
Secretary
34
<PAGE>
APPENDIX A
FORM OF INTERIM
INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND TRUST
AND
THE CHASE MANHATTAN BANK, N.A.
AGREEMENT made this day of , by and between MUTUAL FUND TRUST (the
"Trust") on behalf of the series of the Trust (the "Fund") and THE
CHASE MANHATTAN BANK, N.A., a national banking association (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust and the Adviser desire to enter into an agreement to
provide advisory services for the Fund on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of
which is hereby acknowledged, it is hereby agreed by and between the parties
hereto as follows:
1. Appointment. The Adviser agrees, all as more fully set forth herein,
to act as investment adviser to the Fund with respect to the investment of
its assets and to supervise and arrange the purchase of securities for and
the sale of securities held in the portfolio of the Fund.
2. Duties and Obligations of the Adviser With Respect to Investments of
Assets of the Fund.
(a) Subject to the succeeding provisions of this section and subject to
the direction and control of the Board of Trustees of the Trust, the
Adviser shall:
(i) supervise continuously the investment program of the Fund and the
composition of its portfolio;
(ii) determine what securities shall be purchased or sold by the
Fund; and
(iii) arrange for the purchase and the sale of securities held in the
portfolio of the Fund.
(b) Any investment program furnished by the Adviser under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by:
(i) the provisions of the Act and of any rules or regulations in
force thereunder;
(ii) any other applicable provisions of state and federal law;
(iii) the provisions of the Declaration of Trust and By-Laws of the
Trust, as amended from time to time;
(iv) any policies and determinations of the Board of Trustees of the
Trust; and
(v) the fundamental policies of the Fund, as reflected in its
Registration Statement under the Act, as amended from time to time.
(c) In making recommendations for the Fund, Trust Division personnel of
the Adviser will not inquire or take into consideration whether the issuer
of securities proposed for purchase or sale for the Fund's account are
customers of the Commercial Division of the Adviser. In dealing with
commercial customers, the Commercial Division will not inquire or take into
consideration whether securities of those customers are held by the Fund.
(d) The Adviser shall give the Fund the benefit of its best judgment and
effort in rendering services hereunder, but the Adviser shall not be liable
for any loss sustained by the Fund in connection with the matters to which
this Agreement relates, including specifically but not limited to, the
calculation of net asset value and the adoption of any investment policy or
the purchase, sale or retention of any security, whether or not such
purchase, sale or retention shall have been based upon its own
investigation and research or upon investigation and research made by any
other individual, firm or corporation, if such purchase, sale or retention
shall have been made and such other individual, firm or corporation shall
have been selected in good faith. Nothing herein contained shall, however,
be construed to protect the Adviser against any liability to the Fund or
its security holders by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Adviser or any
affiliated person (as defined in the Act) of the Adviser from acting as
investment adviser or manager for any other person, firm or corporation
(including other investment companies) and shall not in any way limit or
restrict the Adviser or any such affiliated person from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the
Adviser expressly represents that it will undertake no activities which, in
its judgment, will adversely affect the performance of its obligations to
the Fund under this Agreement.
<PAGE>
(f) The Fund will supply the Adviser with certified copies of the
following documents: (i) the Trust's Declaration of Trust and By-Laws, as
amended; (ii) resolutions of the Trust's Board of Trustees and shareholders
authorizing the appointment of the Adviser and approving this Agreement;
(iii) the Trust's Registration Statement, as filed with the SEC; and (iv)
the Fund's most recent prospectus and statement of additional information.
The Fund will furnish the Adviser from time to time with copies of all
amendments or supplements to the foregoing, if any, and all documents,
notices and reports filed with the SEC.
(g) The Fund will supply, or cause its custodian bank to supply, to the
Adviser such financial information as is necessary or desirable for the
functions of the Adviser hereunder.
3. Broker-Dealer Relationships. The Adviser is responsible for decisions to
buy and sell securities for the Fund, broker-dealer selection and negotiation
of its brokerage commission rates. The Adviser's primary consideration in
effecting a security transaction will be execution at the most favorable
price. The Fund understands that a substantial majority of the Fund's
portfolio transactions will be transacted with primary market makers acting
as principal on a net basis, with no brokerage commissions being paid by the
Fund. Such principal transactions may, however, result in a profit to the
market makers. In certain instances the Adviser may make purchases of
underwritten issues at prices which include underwriting fees. In selecting a
broker or dealer to execute each particular transaction, the Adviser will
take the following into consideration; the best price available; the
reliability, integrity and financial condition of the broker or dealer; the
size of and difficulty in executing the order; and the value of the expected
contribution of the broker or dealer to the investment performance of the
Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker or
dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board
of Trustees may determine, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage and research services to the Adviser an amount
of commission for effecting a portfolio investment transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Adviser's overall responsibilities
with respect to the Fund. The Adviser is further authorized to allocate the
orders placed by it on behalf of the Fund to such brokers and dealers who
also provide research or statistical material, or other services to the Fund
(which material or services may also assist the Adviser in rendering services
to other clients). Such allocation shall be in such amounts and proportions
as the Adviser shall determine and the Adviser will report on said
allocations regularly to the Board of Trustees indicating the brokers to whom
such allocations have been made and the basis therefor.
4. Allocation of Expenses. The Adviser agrees that it will furnish the Fund,
at its expense, all office space and facilities, equipment and clerical
personnel necessary for carrying out its duties under this Agreement and the
keeping of certain accounting records of the Fund. The Adviser agrees that it
will supply to any sub-adviser or administrator (the "Administrator") of the
Fund all necessary financial information in connection with the
Administrator's duties under any Agreement between the Administrator and the
Trust. The Adviser will also pay all compensation of all Trustees, officers
and employees of the Fund who are "affiliated persons" of the Adviser as
defined in the Act. All costs and expenses not expressly assumed by the
Adviser under this Agreement or by the Administrator under the administration
agreement between it and the Trust shall be paid by the Fund, including, but
not limited to (i) fees paid to the Adviser and the Administrator; (ii)
interest and taxes; (iii) brokerage commissions; (iv) insurance premiums; (v)
compensation and expenses of its Trustees other than those affiliated with
the Adviser or the Administrator; (vi) legal, accounting and audit expenses;
(vii) custodian and transfer agent, or shareholder servicing agent, fees and
expenses; (viii) expenses, including clerical expenses, incident to the
issuance, redemption or repurchase of shares, including issuance on the
payment of, or reinvestment of, dividends; (ix) fees and expenses incident to
the registration under Federal or state securities laws of the Fund or its
shares; (x) expenses of preparing, setting in type, printing and mailing
prospectuses, statements of additional information, reports and notices and
proxy material to shareholders of the Fund; (xi) all other expenses
incidental to holding meetings of the Fund's shareholders; and (xii) such
extraordinary expenses as may arise, including litigation affecting the Fund
and the legal obligations which the Trust may have to indemnify its officers
and Trustees with respect thereto.
5. Compensation of the Adviser. (a) For the services to be rendered and the
expenses assumed by the Adviser, the Fund shall pay to the Adviser monthly
compensation at an annual rate, of % [see schedule attached] of the Fund's
average daily net assets. Except as hereinafter set forth, compensation under
this Agreement shall be calculated and accrued daily and the amounts of the
daily accruals shall be paid monthly. If the Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day
of a month, compensation for that part of the month this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Subject to the provisions of subsection (b) hereof,
payment of the Adviser's compensation for the preceding month shall be made
as promptly as possible after completion of the computations contemplated by
subsection (b) hereof.
(b) In the event the operating expenses of the Fund including all
investment advisory, sub-advisory and administration fees, for any fiscal
year ending on a date on which this Agreement is in effect exceed the
expense limitations applicable to the Fund imposed by the securities laws
or regulations thereunder of any state in which the Fund's shares are
qualified for sale, as such limitations may be raised or lowered from time
to time, the Adviser shall reduce its investment advisory fee, but not
below zero, to the extent of its share of such excess expenses; provided,
however, there shall be excluded from such expenses the amount of any
interest, taxes, brokerage commissions and extraordinary expenses
(including but not limited to legal claims and liabilities and litigation
costs and any indemnification related thereto) paid or payable by the Fund.
Such reduc-
2
<PAGE>
tion, if any, shall be computed and accrued daily, shall be settled on a
monthly basis and shall be based upon the expense limitation applicable to
the Fund as at the end of the last business day of the month. Should two or
more of such expense limitations be applicable as at the end of the last
business day of the month, that expense limitation which results in the
largest reduction in the Adviser's fee shall be applicable. For the purposes
of this paragraph, the Adviser's share of any excess expenses shall be
computed by multiplying such excess expenses by a fraction, the numerator of
which is the amount of the investment advisory fee which would otherwise be
payable to the Adviser for such fiscal year were it not for this subsection
5(b) and the denominator of which is the sum of all investment advisory and
administrative fees which would otherwise be payable by the Fund were it not
for the expense limitation provisions of any investment advisory or
administrative agreement to which the Fund is a party.
6. Duration, Amendment and Termination. (a) This Agreement shall go into
effect as to the Fund on the date set forth above (the "Effective Date") and
shall, unless terminated as hereinafter provided, continue in effect until
May 30, 1996, unless the Fund shareholders approve the Agreement prior to
such date. Upon approval by shareholders, this agreement shall, unless
terminated as hereinafter provided, continue in effect for two years from the
date of such approval and shall continue from year to year thereafter, but
only so long as such continuance is specifically approved at least annually
by the Board of Trustees of the Trust, including the vote of a majority of
the Trustees who are not parties to this Agreement or "interested persons"
(as defined in the Act) of any such party cast in person at a meeting called
for the purpose of voting on such approval, or by the vote of the holders of
a "majority" (as so defined) of the outstanding voting securities of the Fund
and by such a vote of the Trustees.
(b) This Agreement may not be amended except in accordance with the
provisions of the Act, including specifically, the provisions of the Act
and the rules and regulations thereunder regarding series votes by
shareholders of the Fund.
(c) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Fund sixty (60) days' written notice (which notice
may be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty (60) days' written notice
(which notice may be waived by the Adviser), provided that such termination
by the Fund shall be approved by the vote of a majority of all the Trustees
in office at the time or by the vote of the holders of a majority (as
defined in the Act) of the voting securities of the Fund at the time
outstanding and entitled to vote. This Agreement may only be terminated in
accordance with the provisions of the Act, and shall automatically
terminate in the event of its assignment (as defined in the Act).
7. Board of Trustees Meeting. The Fund agrees that notice of each meeting of
the Board of Trustees of the Trust will be sent to the Adviser and that the
Fund will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may
designate.
8. Notices. Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as
such other party may designate for the receipt of such notice. Until further
notice to the other party, it is agreed that the address of the Fund for this
purpose shall be 125 West 55th Street, New York, New York 10019, and that of
the Adviser shall be One Chase Manhattan Plaza, New York, New York 10081.
9. Questions of Interpretation. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the Act, as amended, shall be resolved by reference to
such term or provision of the Act and to interpretations thereof, if any, by
the United States Courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is
revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers and their seals to be
hereunder affixed, all as of the day and year first above written.
MUTUAL FUND TRUST
By:
----------------------------------
Name:
Title:
ATTEST:
THE CHASE MANHATTAN BANK, N.A.
By:
----------------------------------
Name:
Title:
ATTEST:
3
<PAGE>
Schedule A
<TABLE>
<CAPTION>
Fund: Fee:
- ------ ------
<S> <C>
1. Vista California Tax Free Money Market Fund 0.10%
2. Vista New York Tax Free Money Market Fund 0.10
3. Vista Tax Free Money Market Fund 0.10
4. Vista U.S. Government Money Market Fund 0.10
5. Vista Global Money Market Fund 0.10
6. Vista Federal Money Market Fund 0.10
7. Vista Treasury Plus Money Market Fund 0.10
8. Vista Prime Money Market Fund 0.10
9. Vista Tax Free Income Fund 0.30
10. Vista New York Tax Free Income Fund 0.30
11. Vista California Intermediate Tax Free Fund 0.30
</TABLE>
4
<PAGE>
APPENDIX B
FORM OF NEW
INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND TRUST
AND
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR
AGREEMENT made this day of , 1996, by and between Mutual Fund Trust, a
Massachusetts business trust which may issue one or more series of shares
(hereinafter the "Trust"), and The Chase Manhattan Bank, N.A., a national
banking association and its successor, The Chase Manhattan Bank, a New York
state chartered bank (hereinafter the "Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services in connection with the series of the Trust listed on
Schedule A (each, a "Fund" and collectively, the "Funds"), and the Adviser
represents that it is willing and possesses legal authority to so furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Structure of Agreement. The Trust is entering into this Agreement on
behalf of the Funds severally and not jointly. The responsibilities and
benefits set forth in this Agreement shall refer to each Fund severally and
not jointly. No individual Fund shall have any responsibility for any
obligation with respect to any other Fund arising out of this Agreement.
Without otherwise limiting the generality of the foregoing,
(a) any breach of any term of this Agreement regarding the Trust with
respect to any one Fund shall not create a right or obligation with respect
to any other Fund;
(b) under no circumstances shall the Adviser have the right to set off
claims relating to a Fund by applying property of any other Fund; and
(c) the business and contractual relationships created by this
Agreement, the consideration for entering into this Agreement, and the
consequences of such relationships and consideration relate solely to the
Trust and the particular Fund to which such relationship and consideration
applies.
2. Delivery of Documents. The Trust has delivered to the Adviser copies of
each of the following documents and will deliver to it all future amendments
and supplements thereto, if any:
(a) The Trust's Declaration of Trust;
(b) The By-Laws of the Trust;
(c) Resolutions of the Board of Trustees of the Trust authorizing the
execution and delivery of this Agreement;
(d) The Trust's Registration Statement under the Securities Act of 1933,
as amended (the "1933 Act"), and the Investment Company Act of 1940, as
amended (the "1940 Act"), on Form N-1A as filed with the Securities and
Exchange Commission (the "Commission") on July 18, 1994 and all subsequent
amendments thereto relating to the Funds (the "Registration Statement");
(e) Notification of Registration of the Trust under the 1940 Act on Form
N-8A as filed with the Commission; and
(f) Prospectuses and Statements of Additional Information of the Funds
(collectively, the "Prospectuses").
3. Appointment.
(a) General. The Trust hereby appoints the Adviser to act as investment
adviser to the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion, provide
such services through its own employees or the employees of one or more
affiliated companies that are qualified to act as an investment adviser to
the Trust under applicable laws and are under the control of The Chase
Manhattan Corporation, the parent of the Adviser; provided that (i) all
persons, when providing services hereunder, are functioning as part of an
organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the Adviser.
<PAGE>
(c) Sub-Advisers. It is understood and agreed that the Adviser may from
time to time employ or associate with such other entities or persons as the
Adviser believes appropriate to assist in the performance of this Agreement
with respect to a particular Fund or Funds (each a "Sub-Adviser"), and that
any such Sub-Adviser shall have all of the rights and powers of the Adviser
set forth in this Agreement; provided that a Fund shall not pay any
additional compensation for any Sub- Adviser and the Adviser shall be as
fully responsible to the Trust for the acts and omissions of the
Sub-Adviser as it is for its own acts and omissions; and provided further
that the retention of any Sub-Adviser shall be approved in advance by (i)
the Board of Trustees of the Trust and (ii) the shareholders of the
relevant Fund if required under any applicable provisions of the 1940 Act.
The Adviser will review, monitor and report to the Trust's Board of
Trustees regarding the performance and investment procedures of any
Sub-Adviser. In the event that the services of any Sub-Adviser are
terminated, the Adviser may provide investment advisory services pursuant
to this Agreement to the Fund without a Sub-Adviser and without further
shareholder approval, to the extent consistent with the 1940 Act. A
Sub-Adviser may be an affiliate of the Adviser.
4. Investment Advisory Services.
(a) Management of the Funds. The Adviser hereby undertakes to act as
investment adviser to the Funds. The Adviser shall regularly provide
investment advice to the Funds and continuously supervise the investment
and reinvestment of cash, securities and other property composing the
assets of the Funds and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the Trust and each
Fund;
(ii) obtain and evaluate pertinent economic, statistical and
financial data, as well as other significant events and developments,
which affect the economy generally, the Funds' investment programs, and
the issuers of securities included in the Funds' portfolios and the
industries in which they engage, or which may relate to securities or
other investments which the Adviser may deem desirable for inclusion in
a Fund's portfolio;
(iii) determine which issuers and securities shall be included in the
portfolio of each Fund;
(iv) furnish a continuous investment program for each Fund;
(v) in its discretion and without prior consultation with the Trust,
buy, sell, lend and otherwise trade any stocks, bonds and other
securities and investment instruments on behalf of each Fund; and
(vi) take, on behalf of each Fund, all actions the Adviser may deem
necessary in order to carry into effect such investment program and the
Adviser's functions as provided above, including the making of
appropriate periodic reports to the Trust's Board of Trustees.
(b) Covenants. The Adviser shall carry out its investment advisory and
supervisory responsibilities in a manner consistent with the investment
objectives, policies, and restrictions provided in:
(i) each Fund's Prospectus and Statement of Additional Information as
revised and in effect from time to time;
(ii) the Company's Trust Instrument, By-Laws or other governing
instruments, as amended from time to time;
(iii) the 1940 Act;
(iv) other applicable laws; and
(v) such other investment policies, procedures and/or limitations as
may be adopted by the Company with respect to a Fund and provided to the
Adviser in writing. The Adviser agrees to use reasonable efforts to
manage each Fund so that it will qualify, and continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended, and regulations issued thereunder (the
"Code"), except as may be authorized to the contrary by the Company's
Board of Trustees. The management of the Funds by the Adviser shall at
all times be subject to the review of the Company's Board of Trustees.
(c) Books and Records. The Adviser shall keep each Fund's books and
records required by applicable law to be maintained by the Funds with
respect to advisory services. The Adviser agrees that all records which it
maintains for a Fund are the property of the Fund and it will promptly
surrender any of such records to the Fund upon the Fund's request. The
Adviser further agrees to preserve for the periods prescribed by the 1940
Act any such records of the Fund required to be preserved by such Rule.
(d) Reports, Evaluations and other services. The Adviser shall furnish
reports, evaluations, information or analyses to the Trust with respect to
the Funds and in connection with the Adviser's services hereunder as the
Trust's Board of Trustees may request from time to time or as the Adviser
may otherwise deem to be desirable. The Adviser shall make recommendations
to the Trust's Board of Trustees with respect to Trust policies, and shall
carry out such policies as are adopted by the Board of Trustees. The
Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Adviser shall place all orders
for the purchase and sale of portfolio securities for each Fund with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser to the extent permitted by the 1940 Act
and the Trust's policies and procedures applicable to the Funds. The
Adviser shall use its best efforts to seek to execute portfolio
transactions at prices which, under the circumstances, result in total
costs or proceeds being the most favorable to the Funds. In assessing the
best overall terms available for any transaction, the
2
<PAGE>
Adviser shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer,
research services provided to the Adviser, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis. In no event shall the Adviser be under any duty to
obtain the lowest commission or the best net price for any Fund on any
particular transaction, nor shall the Adviser be under any duty to
execute any order in a fashion either preferential to any Fund relative
to other accounts managed by the Adviser or otherwise materially
adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Adviser, the Funds and/or the other accounts over which the Adviser
exercises investment discretion. The Adviser is authorized to pay a broker
or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for a Fund which is in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that the
total commission is reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the overall responsibilities of the
Adviser with respect to accounts over which it exercises investment
discretion. The Adviser shall report to the Board of Trustees of the Trust
regarding overall commissions paid by the Funds and their reasonableness in
relation to the benefits to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be sold or purchased with those of other Funds or its
other clients if, in the Adviser's reasonable judgment, such aggregation
(i) will result in an overall economic benefit to the Fund, taking into
consideration the advantageous selling or purchase price, brokerage
commission and other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Trust's registration
statement and the Fund's Prospectus and Statement of Additional
Information. In such event, the Adviser will allocate the securities so
purchased or sold, and the expenses incurred in the transaction, in an
equitable manner, consistent with its fiduciary obligations to the Fund and
such other clients.
5. Expenses.
(a) The Adviser shall, at its expense, provide the Funds with office
space, furnishings and equipment and personnel required by it to perform
the services to be provided by the Adviser pursuant to this Agreement. The
Adviser also hereby agrees that it will supply to any sub-adviser or
administrator (the "Administrator") of a Fund all necessary financial
information in connection with the Administrator's duties under any
Agreement between the Administrator and the Trust.
(b) Except as provided in subparagraph (a), the Trust shall be
responsible for all of the Funds' expenses and liabilities, including, but
not limited to, taxes; interest; fees (including fees paid to its trustees
who are not affiliated with the Adviser or any of its affiliates); fees
payable to the Securities and Exchange Commission; state securities
qualification fees; association membership dues; costs of preparing and
printing Prospectuses for regulatory purposes and for distribution to
existing shareholders; advisory and administration fees; charges of the
custodian and transfer agent; insurance premiums; auditing and legal
expenses; costs of shareholders' reports and shareholders' meetings; any
extraordinary expenses; and brokerage fees and commissions, if any, in
connection with the purchase or sale of portfolio securities.
6. Compensation.
(a) In consideration of the services to be rendered by the Adviser under
this Agreement, the Trust shall pay the Adviser monthly fees on the first
Business Day (as defined in the Prospectuses) of each month based upon the
average daily net assets of each Fund during the preceding month (as
determined on the days and at the time set forth in the Prospectuses for
determining net asset value per share) at the annual rate set forth
opposite the Fund's name on Schedule A attached hereto. If the fees payable
to the Adviser pursuant to this paragraph begin to accrue before the end of
any month or if this Agreement terminates before the end of any month, the
fees for the period from such date to the end of such month or from the
beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to
the full month in which such effectiveness or termination occurs. For
purposes of calculating each such monthly fee, the value of the Funds' net
assets shall be computed in the manner specified in the Prospectuses and
the Articles for the computation of the value of the Funds' net assets in
connection with the determination of the net asset value of shares of the
Funds' capital stock.
(b) If the aggregate expenses incurred by, or allocated to, each Fund in
any fiscal year shall exceed the lowest expense limitation, if applicable
to such Fund, imposed by state securities laws or regulations thereunder,
as such limitations may be raised or lowered from time to time, the Adviser
shall reduce its investment advisory fee, but not below zero, to the extent
of its share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be
computed and accrued daily, shall be settled on a monthly basis and shall
be based upon the expense limitation applicable to the Fund as at the end
of the last business day of the month. Should two or more of such expense
limitations be applicable at the end of the last business day of the month,
that expense limitation which results in the largest reduction in the
Adviser's fee shall be applicable. For the purposes of this paragraph, the
Adviser's share of any excess expenses shall be computed
3
<PAGE>
by multiplying such excess expenses by a fraction, the numerator of
which is the amount of the investment advisory fee which would
otherwise be payable to the Adviser for such fiscal year were it not
for this subsection 6(b) and the denominator of which is the sum of all
investment advisory and administrative fees which would otherwise be
payable by the Fund were it not for the expense limitation provisions
of any investment advisory or administrative agreement to which the
Fund is a party.
(c) In consideration of the Adviser's undertaking to render the services
described in this Agreement, the Trust agrees that the Adviser shall not be
liable under this Agreement for any error of judgment or mistake of law or
for any act or omission or loss suffered by the Trust in connection with
the performance of this Agreement, provided that nothing in this Agreement
shall be deemed to protect or purport to protect the Investment Adviser
against any liability to the Trust or its stockholders to which the Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of the Adviser's duties under this
Agreement or by reason of the Adviser's reckless disregard of its
obligations and duties hereunder or breach of fiduciary duty with respect
to receipt of compensation.
7. Non-Exclusive Services. Except to the extent necessary to perform the
Investment Adviser's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of the Adviser, or any affiliate of
the Adviser, including any employee of the Adviser, to engage in any other
business or to devote time and attention to the management or other aspects
of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm, individual or
association.
8. Effective Date; Modifications; Termination. This Agreement shall become
effective on the date hereof (the "Effective Date"), provided that it shall
have been approved by a majority of the outstanding voting securities of each
Fund, in accordance with the requirements of the 1940 Act, or such later date
as may be agreed by the parties following such shareholder approval.
(a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph, this Agreement shall continue in force for two years from
the date hereof and shall continue in effect from year to year thereafter,
but only so long as the continuance after such date shall be specifically
approved at least annually by vote of the Trustees of the Trust or by vote
of a majority of the outstanding voting securities of each Fund.
(b) This Agreement may be modified by mutual consent, such consent on
the part of the Trust to be authorized by vote of a majority of the
outstanding voting securities of each Fund.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days prior
written notice to the other, terminate this Agreement, without payment of
any penalty, by action of its Trustees or Board of Trustees, as the case
may be, or by action of its authorized officers or, with respect to a Fund,
by vote of a majority of the outstanding voting securities of that Fund.
This Agreement may remain in effect with respect to a Fund even if it has
been terminated in accordance with this paragraph with respect to the other
Funds. This Agreement shall terminate automatically in the event of its
assignment as that term is defined under the 1940 Act..
9. Board of Trustees Meetings. The Trust agrees that notice of each meeting
of the Board of Trustees of the Trust will be sent to the Adviser and that the
Trust will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may designate.
10. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, and their respective
seals to be hereunto affixed, all as of the date written above.
CHASE ASSET MANAGEMENT, INC. THE CHASE MANHATTAN BANK, N.A.
By:---------------------------------- By:--------------------------------
Name: Name
Title: Title:
4
<PAGE>
Schedule A
<TABLE>
<CAPTION>
Fund: Fee:
- ------ ------
<S> <C>
1. Vista California Tax Free Money Market Fund 0.10%
2. Vista New York Tax Free Money Market Fund 0.10
3. Vista Tax Free Money Market Fund 0.10
4. Vista U.S. Government Money Market Fund 0.10
5. Vista Global Money Market Fund 0.10
6. Vista Federal Money Market Fund 0.10
7. Vista Treasury Plus Money Market Fund 0.10
8. Vista Prime Money Market Fund 0.10
9. Vista Tax Free Income Fund 0.30
10. Vista New York Tax Free Income Fund 0.30
11. Vista California Intermediate Tax Free Fund 0.30
</TABLE>
5
<PAGE>
APPENDIX C
FORM OF
PROPOSED
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR AND
CHASE ASSET MANAGEMENT, INC.
AGREEMENT made as of the day of , 1996, by and between The Chase Manhattan
Bank, N.A., a national banking association and its successor, The Chase
Manhattan Bank, a New York State chartered bank (the "Adviser"), and Chase
Asset Management, Inc., a Delaware corporation (the "Sub-Adviser").
WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Adviser provides investment advisory services to the series
of Mutual Fund Trust, a Massachusetts business trust (the "Trust"), an
open-end, management investment company registered under the Investment Trust
Act of 1940, as amended (the "1940 Act") which serves as the underlying
investment for certain variable annuity contracts issued by insurance company
separate accounts, pursuant to an Investment Advisory Agreement dated
, 1996 (the "Advisory Agreement"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment subadvisory services in connection with the series of the Trust
listed on Schedule A (each, a "Fund" and collectively, the "Funds"), and the
Sub-Adviser represents that it is willing and possesses legal authority to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) General. The Adviser hereby appoints the Sub-Adviser to act as
investment subadviser to the Funds for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
(b) Employees of Affiliates. The Sub-Adviser may, in its discretion,
provide such services through its own employees or the employees of one or
more affiliated companies that are qualified to act as an investment
subadviser to the Funds under applicable laws and are under the control of
New Chase, the parent of the Sub-Adviser; provided that (i) all persons,
when providing services hereunder, are functioning as part of an organized
group of persons, and (ii) such organized group of persons is managed at
all times by authorized officers of the Sub-Adviser.
2. Delivery of Documents. The Adviser has delivered to the Sub-Adviser
copies of each of the following documents along with all amendments thereto
through the date hereof, and will promptly deliver to it all future
amendments and supplements thereto, if any:
(a) the Trust's Declaration of Trust;
(b) the By-Laws of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing the
execution and delivery of the Advisory Agreement and this Agreement;
(d) the most recent Post-Effective Amendment to the Trust's Registration
Statement under the Securities Act of 1933, as amended (the "1933 Act"),
and the 1940 Act, on Form N-1A as filed with the Securities and Exchange
Commission (the "Commission");
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission; and
(f) the currently effective Prospectuses and Statements of Additional
Information of the Funds.
3. Investment Advisory Services.
(a) Management of the Funds. The Sub-Adviser hereby undertakes to act as
investment subadviser to the Funds. The Sub- Adviser shall regularly
provide investment advice to the Funds and continuously supervise the
investment and reinvestment of cash, securities and other property
composing the assets of the Funds and, in furtherance thereof, shall:
(i) obtain and evaluate pertinent economic, statistical and financial
data, as well as other significant events and developments, which affect
the economy generally, the Funds' investment programs, and the issuers
of securities included in the portfolio of each Fund and the industries
in which they engage, or which may relate to securities or other
investments which the Sub-Adviser may deem desirable for inclusion in a
Fund's portfolio;
<PAGE>
(ii) determine which issuers and securities shall be included in the
portfolio of each Fund;
(iii) furnish a continuous investment program for each Fund;
(iv) in its discretion, and without prior consultation, buy, sell,
lend and otherwise trade any stocks, bonds and other securities and
investment instruments on behalf of each Fund; and
(v) take, on behalf of each Fund, all actions the Sub-Adviser may
deem necessary in order to carry into effect such investment program and
the Sub-Adviser's functions as provided above, including the making of
appropriate periodic reports to the Adviser and the Trust's Board of
Trustees.
(b) Covenants. The Sub-Adviser shall carry out its investment
subadvisory responsibilities in a manner consistent with the investment
objectives, policies, and restrictions provided in:
(i) each Fund's Prospectus and Statement of Additional Information as
revised and in effect from time to time;
(ii) the Trust's Declaration of Trust, By-Laws or other governing
instruments, as amended from time to time;
(iii) the 1940 Act;
(iv) the provisions of the Internal Revenue Code of 1986, as amended,
including Subchapters L and M, relating to Variable Contracts and
regulated investment companies, respectively;
(v) other applicable laws; and
(vi) such other investment policies, procedures and/or limitations as
may be adopted by the Trust with respect to a Fund and provided to the
Adviser in writing. The management of the Funds by the Adviser shall at
all times be subject to the review of the Trust's Board of Trustees.
(c) Books and Records. Pursuant to applicable law, the Sub-Adviser shall
keep each Fund's books and records required to be maintained by, or on
behalf of, the Funds with respect to subadvisory services rendered
hereunder. The Sub-Adviser agrees that all records which it maintains for a
Fund are the property of the Fund and it will promptly surrender any of
such records to the Fund upon the Fund's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records of the Fund required to be preserved by such Rule.
(d) Reports, Evaluations and other services. The Sub-Adviser shall
furnish reports, evaluations, information or analyses to the Adviser and
the Trust with respect to the Funds and in connection with the
Sub-Adviser's services hereunder as the Adviser and/or the Trust's Board of
Trustees may request from time to time or as the Sub-Adviser may otherwise
deem to be desirable. The Sub-Adviser shall make recommendations to the
Adviser and the Trust's Board of Trustees with respect to the Trust's
policies, and shall carry out such policies as are adopted by the Board of
Trustees. The Sub-Adviser may, subject to review by the Adviser, furnish
such other services as the Sub-Adviser shall from time to time determine to
be necessary or useful to perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Sub-Adviser shall place all
orders for the purchase and sale of portfolio securities for each Fund with
brokers or dealers selected by the Sub-Adviser, which may include brokers
or dealers affiliated with the Adviser or the Sub-Adviser to the extent
permitted by the 1940 Act and the Trust's policies and procedures
applicable to the Funds. The Sub-Adviser shall use its best efforts to seek
to execute portfolio transactions at prices which, under the circumstances,
result in total costs or proceeds being the most favorable to the Funds. In
assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer,
research services provided to the Sub-Adviser, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis. In no event shall the Sub-Adviser be under any duty to
obtain the lowest commission or the best net price for any Fund on any
particular transaction, nor shall the Sub-Adviser be under any duty to
execute any order in a fashion either preferential to any Fund relative to
other accounts managed by the Sub-Adviser or otherwise materially adverse
to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Sub-Adviser, the Funds, and/or the other accounts over which the
Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized
to pay a broker or dealer who provides such brokerage and research services
a commission for executing a portfolio transaction for a Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Adviser determines in
good faith that the total commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to accounts over which it
exercises investment discretion. The Sub-Adviser shall report to the Board
of Trustees of the Trust regarding overall commissions paid by the Funds
and their reasonableness in relation to their benefits to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be sold or purchased with those of other Funds or its
other clients if, in the Sub-Adviser's reasonable judgment, such
aggregation
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<PAGE>
(i) will result in an overall economic benefit to the Fund, taking
into consideration the advantageous selling or purchase price, brokerage
commission and other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Trust's registration
statement and the Fund's Prospectus and Statement of Additional
Information. In such event, the Sub-Adviser will allocate the securities
so purchased or sold, and the expenses incurred in the transaction, in
an equitable manner, consistent with its fiduciary obligations to the
Fund and such other clients. 4. Representations and Warranties.
(a) The Sub-Adviser hereby represents and warrants to the Adviser as
follows:
(i) The Sub-Adviser is a corporation duly organized and in good
standing under the laws of the State of Delaware and is fully authorized
to enter into this Agreement and carry out its duties and obligations
hereunder.
(ii) The Sub-Adviser is registered as an investment adviser with the
Commission under the Advisers Act, and is registered or licensed as an
investment adviser under the laws of all applicable jurisdictions. The
Sub-Adviser shall maintain such registrations or licenses in effect at
all times during the term of this Agreement.
(iii) The Sub-Adviser at all times shall provide its best judgment
and effort to the Adviser in carrying out the Sub- Adviser's obligations
hereunder.
(b) The Adviser hereby represents and warrants to the Sub-Adviser as
follows:
(i) The Adviser is a national banking association duly organized and
in good standing under the laws of the United States and is fully
authorized to enter into this Agreement and carry out its duties and
obligations hereunder.
(ii) The Trust has been duly organized as a business trust under the
laws of the State of Massachusetts.
(iii) The Trust is registered as an investment company with the
Commission under the 1940 Act, and shares of the each Fund are
registered for offer and sale to the public under the 1933 Act and all
applicable state securities laws where currently sold. Such
registrations will be kept in effect during the term of this Agreement.
5. Compensation.
(a) As compensation for the services which the Sub-Adviser is to provide
or cause to be provided pursuant to Paragraph 3, with respect to each Fund,
the Adviser shall pay to the Sub-Adviser (or cause to be paid by the Trust
directly to the Sub- Adviser) a fee, which shall be accrued daily and paid
in arrears on the first business day of each month, at an annual rate to be
determined between the parties hereto from time to time, as a percentage of
the average daily net assets of the Fund during the preceding month
(computed in the manner set forth in the Fund's most recent Prospectus and
Statement of Additional Information). Average daily net assets shall be
based upon determinations of net assets made as of the close of business on
each business day throughout such month. The fee for any partial month
shall be calculated on a proportionate basis, based upon average daily net
assets for such partial month. As a percentage of average daily net assets.
(b) The Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to time.
Any such voluntary waiver will be irrevocable and determined in advance of
rendering sub-investment advisory services by the Sub-Adviser, and shall be
in writing and signed by the parties hereto.
(c) If the aggregate expenses incurred by, or allocated to, each Fund in
any fiscal year shall exceed the lowest expense limitation, if applicable
to such Fund, imposed by state securities laws or regulations thereunder,
as such limitations may be raised or lowered from time to time, the
Sub-Adviser shall reduce its investment advisory fee, but not below zero,
to the extent of its share of such excess expenses; provided, however,
there shall be excluded from such expenses the amount of any interest,
taxes, brokerage commissions and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily, shall be settled on
a monthly basis and shall be based upon the expense limitation applicable
to the Fund as at the end of the last business day of the month. Should two
or more of such expense limitations be applicable at the end of the last
business day of the month, that expense limitation which results in the
largest reduction in the Sub- Adviser's fee shall be applicable. For the
purposes of this paragraph, the Sub-Adviser's share of any excess expenses
shall be computed by multiplying such excess expenses by a fraction, the
numerator of which is the amount of the investment advisory fee which would
otherwise be payable to the Sub-Adviser for such fiscal year were it not
for this subsection 5(b) and the denominator of which is the sum of all
investment advisory and administrative fees which would otherwise be
payable by the Fund were it not for the expense limitation provisions of
any investment advisory or administrative agreement to which the Fund is a
party.
6. Interested Persons. It is understood that, to the extent consistent with
applicable laws, the Trustees, officers and shareholders of the Trust or the
Adviser are or may be or become interested in the Sub-Adviser as directors,
officers or otherwise and that directors, officers and shareholders of the
Sub-Adviser are or may be or become similarly interested in the Trust or
the Adviser.
7. Expenses. The Sub-Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
securities (including brokerage commissions) purchased for or sold by the
Funds.
8. Non-Exclusive Services; Limitation of Sub-Adviser's Liability. The
services of the Sub-Adviser hereunder are not to be deemed exclusive, and the
Sub-Adviser may render similar services to others and engage in other
activiti. The Sub-Adviser and its
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<PAGE>
affiliates may enter into other agreements with the Funds, the Trust or the
Adviser for providing additional services to the Funds, the Trust or the
Adviser which are not covered by this Agreement, and to receive additional
compensation for such services. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or a breach of fiduciary duty with
respect to receipt of compensation, neither the Sub-Adviser nor any of its
directors, officers, shareholders, agents, or employees shall be liable or
responsible to the Adviser, the Trust, the Funds or to any shareholder of the
Funds for any error of judgment or mistake of law or for any act or omission
in the course of, or connected with, rendering services hereunder or for any
loss suffered by the Adviser, the Trust, a Fund, or any shareholder of a Fund
in connection with the performance of this Agreement.
9. Effective Date; Modifications; Termination. This Agreement shall become
effective on the date hereof (the "Effective Date") provided that it shall
have been approved by a majority of the outstanding voting securities of each
Fund, in accordance with the requirements of the 1940 Act, or such later date
as may be agreed by the parties following such shareholder approval.
(a) This Agreement shall continue in force for two years from the
Effective Date. Thereafter, this Agreement shall continue in effect as to
each Fund for successive annual periods, provided such continuance is
specifically approved at least annually (i) by a vote of the majority of
the Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by a vote of the Board
of Trustees of the Trust or a majority of the outstanding voting securities
of the Fund.
(b) The modification of any of the non-material terms of this Agreement
may be approved by a vote of a majority of those Trustees of the Trust who
are not interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9, either
party hereto may terminate this Agreement as to any Fund(s) at any time on
sixty (60) days' prior written notice to the other, without payment of any
penalty. A termination of the Sub-Adviser may be effected as to any
particular Fund by the Adviser, by a vote of the Trust's Board of Trustees,
or by vote of a majority of the outstanding voting securities of the Fund.
This Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability of Trustees and Shareholders. The Sub-Adviser
acknowledges the following limitation of liability:
The terms "Mutual Fund Trust" and "Trustees of Mutual Trust" refer,
respectively, to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Declaration of
Trust, to which reference is hereby made and a copy of which is on file at
the office of the Secretary of State of the State of Massachusetts, such
reference being inclusive of any and all amendments thereto so filed or
hereafter filed. The obligations of "Mutual Fund Trust" entered into in the
name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities and are not binding upon
any of the Trustees, shareholders or representatives of the Trust personally,
but bind only the assets of the Trust, and all persons dealing with the Trust
or a Fund must look solely to the assets of the Trust or Fund for the
enforcement of any claims against the Trust or Fund.
11. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities," "assignment," "control," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act.
References in this Agreement to the 1940 Act and the Advisers Act shall be
construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
12. Independent Contractor. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees of the Trust
from time to time, have no authority to act for or represent a Fund in any
way or otherwise be deemed an agent of a Fund.
13. Structure of Agreement. The Adviser and Sub-Adviser are entering into
this Agreement with regard to the respective Funds severally and not jointly.
The responsibilities and benefits set forth in this Agreement shall be deemed
to be effective as between the Adviser and Sub-Adviser in connection with
each Fund severally and not jointly. This Agreement is intended to govern
only the relationships between the Adviser, on the one hand, and the
Sub-Adviser, on the other hand, and is not intended to and shall not govern
(i) the relationship between the Adviser or Sub-Adviser and any Fund, or (ii)
the relationships among the respective Funds.
14. Governing Law. This Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or the Advisers Act.
15. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
16. Notices. Notices of any kind to be given to the Adviser hereunder by
the Sub-Adviser shall be in writing and shall be duly given if mailed or
delivered to the Adviser at or at such other address or to such individual as
shall be so specified by the Adviser to the Sub-Adviser. Notices of any kind
to be given to the Sub-Adviser hereunder by the Adviser shall be in writing
and shall be duly given if mailed or delivered to the Sub-Adviser at or at
such other address or to such individual as shall be so specified by the
Sub-Adviser to the Adviser. Notices shall be effective upon delivery.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the date written
above.
CHASE ASSET MANAGEMENT, INC. THE CHASE MANHATTAN BANK, N.A.
By:----------------------------- By:----------------------------
Name: Name
Title: Title:
Schedule A
Fund:
- ------
1. Vista California Tax Free Money Market Fund
2. Vista New York Tax Free Money Market Fund
3. Vista U.S. Government Money Market Fund
4. Vista Federal Money Market Fund
5. Vista Treasury Plus Money Market Fund
6. Vista Prime Money Market Fund
7. Vista Tax Free Income Fund
8. Vista New York Tax Free Income Fund
9. Vista California Intermediate Tax Free Income Fund
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<PAGE>
APPENDIX D
FORM OF
PROPOSED
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR
AND
TEXAS COMMERCE BANK, NATIONAL ASSOCIATION
AGREEMENT made as of the day of , 1996, by and between The Chase Manhattan
Bank, N.A., a national banking association and its successor, the Chase
Manhattan Bank, a New York State chartered bank (the "Adviser"), and Texas
Commerce Bank, National Association, a national banking association (the
"Sub-Adviser").
WHEREAS, the Adviser provides investment advisory services to the series
of Mutual Fund Trust, a Massachusetts business trust (the "Trust"), which is
registered as an open-end, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), pursuant to an Investment
Advisory Agreement dated the same date hereof (the "Advisory Agreement");
WHEREAS, the Sub-Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment subadvisory services in connection with the series of the Trust
listed on Schedule A (each, a "Fund" and collectively, the "Funds"), and the
Sub-Adviser represents that it is willing and possesses legal authority to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) General. The Adviser hereby appoints the Sub-Adviser to act as
investment subadviser to the Funds for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
(b) Employees of Affiliates. The Sub-Adviser may, in its discretion,
provide such services through its own employees or the employees of one or
more affiliated companies that are qualified to act as an investment
subadviser to the Funds under applicable laws and are under the control of
The Chase Manhattan Corporation, the parent of the Sub-Adviser; provided
that (i) all persons, when providing services hereunder, are functioning as
part of an organized group of persons, and (ii) such organized group of
persons is managed at all times by authorized officers of the Sub-Adviser.
2. Delivery of Documents. The Adviser has delivered to the Sub-Adviser
copies of each of the following documents along with all amendments thereto
through the date hereof, and will promptly deliver to it all future
amendments and supplements thereto, if any:
(a) the Trust's Declaration of Trust;
(b) the By-Laws of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing the
execution and delivery of the Advisory Agreement and this Agreement;
(d) the most recent Post-Effective Amendment to the Trust's Registration
Statement under the Securities Act of 1933, as amended (the "1933 Act"),
and the 1940 Act, on Form N-1A as filed with the Securities and Exchange
Commission (the "Commission");
(e) Notification of Registration of the Trust under the 1940 Act on Form
N-8A as filed with the Commission; and
(f) the currently effective Prospectuses and Statements of Additional
Information of the Funds.
3. Investment Advisory Services.
(a) Management of the Funds. The Sub-Adviser hereby undertakes to act as
investment subadviser to the Funds. The Sub- Adviser shall regularly
provide investment advice to the Funds and continuously supervise the
investment and reinvestment of cash, securities and other property
composing the assets of the Funds and, in furtherance thereof, shall:
(i) obtain and evaluate pertinent economic, statistical and financial
data, as well as other significant events and developments, which affect
the economy generally, the Funds' investment programs, and the issuers
of securities included in the Funds' portfolios and the industries in
which they engage, or which may relate to securities or other
investments which the Sub-Adviser may deem desirable for inclusion in a
Fund's portfolio;
<PAGE>
(ii) determine which issuers and securities shall be included in the
portfolio of each Fund;
(iii) furnish a continuous investment program for each Fund;
(iv) in its discretion, and without prior consultation, buy, sell,
lend and otherwise trade any stocks, bonds and other securities and
investment instruments on behalf of each Fund; and
(v) take, on behalf of each Fund, all actions the Sub-Adviser may
deem necessary in order to carry into effect such investment program and
the Sub-Adviser's functions as provided above, including the making of
appropriate periodic reports to the Adviser and the Trust's Board of
Trustees.
(b) Covenants. The Sub-Adviser shall carry out its investment
subadvisory responsibilities in a manner consistent with the investment
objectives, policies, and restrictions provided in:
(i) each Fund's Prospectus and Statement of Additional Information as
revised and in effect from time to time;
(ii) the Trust's Declaration of Trust, By-Laws or other governing
instruments, as amended from time to time;
(iii) the 1940 Act;
(iv) other applicable laws; and
(v) such other investment policies, procedures and/or limitations as
may be adopted by the Trust or the Adviser with respect to a Fund and
provided to the Sub-Adviser in writing. The Sub-Adviser agrees to use
reasonable efforts to manage each Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended, and regulations
issued thereunder (the "Code"), except as may be authorized to the
contrary by the Trust's Board of Trustees. The management of the Funds
by the Sub- Adviser shall at all times be subject to the review of the
Adviser and the Trust's Board of Trustees.
(c) Books and Records. Pursuant to applicable law, the Sub-Adviser shall
keep each Fund's books and records required to be maintained by, or on
behalf of, the Funds with respect to subadvisory services rendered
hereunder. The Sub-Adviser agrees that all records which it maintains for a
Fund are the property of the Fund and it will promptly surrender any of
such records to the Fund upon the Fund's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records of the Fund required to be preserved by such Rule.
(d) Reports, Evaluations and other services. The Sub-Adviser shall
furnish reports, evaluations, information or analyses to the Adviser and
the Trust with respect to the Funds and in connection with the
Sub-Adviser's services hereunder as the Adviser and/or the Trust's Board of
Trustees may request from time to time or as the Sub-Adviser may otherwise
deem to be desirable. The Sub-Adviser shall make recommendations to the
Adviser and the Trust's Board of Trustees with respect to the Trust's
policies, and shall carry out such policies as are adopted by the Board of
Trustees. The Sub-Adviser may, subject to review by the Adviser, furnish
such other services as the Sub-Adviser shall from time to time determine to
be necessary or useful to perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Sub-Adviser shall place all
orders for the purchase and sale of portfolio securities for each Fund with
brokers or dealers selected by the Sub-Adviser, which may include brokers
or dealers affiliated with the Adviser or the Sub-Adviser to the extent
permitted by the 1940 Act and the Trust's policies and procedures
applicable to the Funds. The Sub-Adviser shall use its best efforts to seek
to execute portfolio transactions at prices which, under the circumstances,
result in total costs or proceeds being the most favorable to the Funds. In
assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer,
research services provided to the Sub-Adviser, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis. In no event shall the Sub-Adviser be under any duty to
obtain the lowest commission or the best net price for any Fund on any
particular transaction, nor shall the Sub-Adviser be under any duty to
execute any order in a fashion either preferential to any Fund relative to
other accounts managed by the Sub-Adviser or otherwise materially adverse
to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Sub-Adviser, the Funds, and/or the other accounts over which the
Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized
to pay a broker or dealer who provides such brokerage and research services
a commission for executing a portfolio transaction for a Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Adviser determines in
good faith that the total commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to accounts over which it
exercises investment discretion. The Sub-Adviser shall report to the Board
of Trustees of the Trust regarding overall commissions paid by the Funds
and their reasonableness in relation to their benefits to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be sold or purchased
2
<PAGE>
with those of other Funds or its other clients if, in the Sub-Adviser's
reasonable judgment, such aggregation (i) will result in an overall economic
benefit to the Fund, taking into consideration the advantageous selling or
purchase price, brokerage commission and other expenses, and trading
requirements, and (ii) is not inconsistent with the policies set forth in the
Trust's registration statement and the Fund's Prospectus and Statement of
Additional Information. In such event, the Sub-Adviser will allocate the
securities so purchased or sold, and the expenses incurred in the
transaction, in an equitable manner, consistent with its fiduciary
obligations to the Fund and such other clients.
4. Representations and Warranties.
(a) The Sub-Adviser hereby represents and warrants to the Adviser as
follows:
(i) The Sub-Adviser is a corporation duly organized and in good
standing under the laws of the United States and is fully authorized to
enter into this Agreement and carry out its duties and obligations
hereunder.
(ii) The Sub-Adviser at all times shall provide its best judgment and
effort to the Adviser in carrying out the Sub- Adviser's obligations
hereunder.
(b) The Adviser hereby represents and warrants to the Sub-Adviser as
follows:
(i) The Adviser is a national banking association duly organized and
in good standing under the laws of the United States and is fully
authorized to enter into this Agreement and carry out its duties and
obligations hereunder.
(ii) The Trust has been duly organized as a business trust under the
laws of the State of Massachusetts.
(iii) The Trust is registered as an investment company with the
Commission under the 1940 Act, and shares of the each Fund are
registered for offer and sale to the public under the 1933 Act and all
applicable state securities laws where currently sold. Such
registrations will be kept in effect during the term of this Agreement.
5. Compensation.
(a) As compensation for the services which the Sub-Adviser is to provide
or cause to be provided pursuant to Paragraph 3, with respect to each Fund,
the Adviser shall pay to the Sub-Adviser (or cause to be paid by the Trust
directly to the Sub- Adviser) a fee, which shall be accrued daily and paid
in arrears on the first business day of each month, at an annual rate to be
determined between the parties hereto from time to time, as a percentage of
the average daily net assets of the Fund during the preceding month
(computed in the manner set forth in the Fund's most recent Prospectus and
Statement of Additional Information). Average daily net assets shall be
based upon determinations of net assets made as of the close of business on
each business day throughout such month. The fee for any partial month
shall be calculated on a proportionate basis, based upon average daily net
assets for such partial month. As a percentage of average daily net assets.
(b) The Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to time.
Any such voluntary waiver will be irrevocable and determined in advance of
rendering sub-investment advisory services by the Sub-Adviser, and shall be
in writing and signed by the parties hereto.
(c) If the aggregate expenses incurred by, or allocated to, each Fund in
any fiscal year shall exceed the lowest expense limitation, if applicable
to such Fund, imposed by state securities laws or regulations thereunder,
as such limitations may be raised or lowered from time to time, the
Sub-Adviser shall reduce its investment advisory fee, but not below zero,
to the extent of its share of such excess expenses; provided, however,
there shall be excluded from such expenses the amount of any interest,
taxes, brokerage commissions and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily, shall be settled on
a monthly basis and shall be based upon the expense limitation applicable
to the Fund as at the end of the last business day of the month. Should two
or more of such expense limitations be applicable at the end of the last
business day of the month, that expense limitation which results in the
largest reduction in the Sub- Adviser's fee shall be applicable. For the
purposes of this paragraph, the Sub-Adviser's share of any excess expenses
shall be computed by multiplying such excess expenses by a fraction, the
numerator of which is the amount of the investment advisory fee which would
otherwise be payable to the Sub-Adviser for such fiscal year were it not
for this subsection 5(b) and the denominator of which is the sum of all
investment advisory and administrative fees which would otherwise be
payable by the Fund were it not for the expense limitation provisions of
any investment advisory or administrative agreement to which the Fund is a
party.
6. Interested Persons. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and shareholders of the Trust or
the Adviser are or may be or become interested in the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
shareholders of the Sub-Adviser are or may be or become similarly interested
in the Trust or the Adviser.
7. Expenses. The Sub-Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
securities (including brokerage commissions) purchased for or sold by the
Funds.
8. Non-Exclusive Services; Limitation of Sub-Adviser's Liability. The
services of the Sub-Adviser hereunder are not to be deemed exclusive, and the
Sub-Adviser may render similar services to others and engage in other
activities. The Sub-Adviser and its affiliates may enter into other
agreements with the Funds, the Trust or the Adviser for providing additional
services to the Funds, the Trust or the Adviser which are not covered by this
Agreement, and to receive additional compensation for such services. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Sub-Adviser,
3
<PAGE>
or a breach of fiduciary duty with respect to receipt of compensation,
neither the Sub-Adviser nor any of its directors, officers, shareholders,
agents, or employees shall be liable or responsible to the Adviser, the
Trust, the Funds or to any shareholder of the Funds for any error of judgment
or mistake of law or for any act or omission in the course of, or connected
with, rendering services hereunder or for any loss suffered by the Adviser,
the Trust, a Fund, or any shareholder of a Fund in connection with the
performance of this Agreement.
9. Effective Date; Modifications; Termination. This Agreement shall become
effective on the date hereof (the "Effective Date") provided that it shall
have been approved by a majority of the outstanding voting securities of each
Fund, in accordance with the requirements of the 1940 Act, or such later date
as may be agreed by the parties following such shareholder approval.
(a) This Agreement shall continue in force until two years from the
Effective Date and shall continue in effect from year to year thereafter as
to each Fund for successive annual periods, provided such continuance is
specifically approved at least annually (i) by a vote of the majority of
the Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by a vote of the Board
of Trustees of the Trust or a majority of the outstanding voting securities
of the Fund.
(b) The modification of any of the non-material terms of this Agreement
may be approved by a vote of a majority of those Trustees of the Trust who
are not interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9, either
party hereto may terminate this Agreement as to any Fund(s) at any time on
sixty (60) days' prior written notice to the other, without payment of any
penalty. A termination of the Sub-Adviser may be effected as to any
particular Fund by the Adviser, by a vote of the Trust's Board of Trustees,
or by vote of a majority of the outstanding voting securities of the Fund.
This Agreement shall terminate automatically in the event of its assignment
or in the event of the termination of the Advisory Agreement.
10. Limitation of Liability of Trustees and Shareholders. The Sub-Adviser
acknowledges the following limitation of liability:
The terms "Mutual Fund Trust" and "Trustees of Mutual Fund Trust" refer,
respectively, to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Declaration of
Trust, to which reference is hereby made and a copy of which is on file at
the office of the Secretary of State of the State of Massachusetts, such
reference being inclusive of any and all amendments thereto so filed or
hereafter filed. The obligations of "Mutual Fund Trust" entered into in the
name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities and are not binding upon
any of the Trustees, shareholders or representatives of the Trust personally,
but bind only the assets of the Trust, and all persons dealing with the Trust
or a Fund must look solely to the assets of the Trust or Fund for the
enforcement of any claims against the Trust or Fund.
11. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities," "assignment," "control," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act.
References in this Agreement to the 1940 Act and the Advisers Act shall be
construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
12. Independent Contractor. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees of the Trust
from time to time, have no authority to act for or represent a Fund in any
way or otherwise be deemed an agent of a Fund.
13. Structure of Agreement. The Adviser and Sub-Adviser are entering into
this Agreement with regard to the respective Funds severally and not jointly.
The responsibilities and benefits set forth in this Agreement shall be deemed
to be effective as between the Adviser and Sub-Adviser in connection with
each Fund severally and not jointly. This Agreement is intended to govern
only the relationships between the Adviser, on the one hand, and the
Sub-Adviser, on the other hand, and is not intended to and shall not govern
(i) the relationship between the Adviser or Sub-Adviser and any Fund, or (ii)
the relationships among the respective Funds.
14. Governing Law. This Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or the Advisers Act.
15. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
16. Notices. Notices of any kind to be given to the Adviser hereunder by
the Sub-Adviser shall be in writing and shall be duly given if mailed or
delivered to the Adviser at or at such other address or to such individual as
shall be so specified by the Adviser to the Sub-Adviser. Notices of any kind
to be given to the Sub-Adviser hereunder by the Adviser shall be in writing
and shall be duly given if mailed or delivered to the Sub-Adviser at or at
such other address or to such individual as shall be so specified by the
Sub-Adviser tothe Adviser. Notices shall be effective upon delivery.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date written
above.
TEXAS COMMERCE BANK,
NATIONAL ASSOCIATION THE CHASE MANHATTAN BANK, N.A.
By:------------------------------- By:----------------------------
Name: Name
Title: Title
Schedule A
Fund:
- ------
1. Vista Global Money Market Fund
2. Vista Tax Free Money Market Fund
5
<PAGE>
APPENDIX E
MUTUAL FUND TRUST
FORM OF
CLASS A SHARES
PROPOSED PLAN FOR PAYMENT OF CERTAIN EXPENSES FOR
DISTRIBUTION OR SHAREHOLDER SERVICING ASSISTANCE
Distribution Plan (the "Plan") of MUTUAL FUND TRUST, a Massachusetts
business trust (the "Trust"), an open-end, non- diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"), on behalf of the class of shares designated as the Class
A Shares of its Vista Tax Free Income Fund, Vista New York Tax Free Income
Fund and Vista California Intermediate Tax Free Income Fund Series, and the
Class A Shares of any series of the Trust which may be created in the future,
adopted pursuant to Section 12(b) of the Act and Rule 12b-1 promulgated
thereunder ("Rule 12b-1").
1. Principal Underwriter. Vista Broker-Dealer Services, Inc., a Delaware
corporation ("the Distributor"), acts as the principal underwriter of the
shares of each series of the Trust pursuant to a Distribution and
Sub-Administration Agreement.
2. Distribution Payments.
(a) The Trust may make payments periodically (i) to the Distributor or
to any broker-dealer (a "Broker") who is registered under the Securities
Exchange Act of 1934 and a member in good standing of the National
Association of Securities Dealers, Inc. and who has entered into a selected
dealer agreement with the Distributor in a form similar to the one annexed
hereto as Exhibit A or (ii) to other persons or organizations ("Servicing
Agents") who have entered into shareholder processing and service
agreements with the Trust or with the Distributor, in a form similar to the
one annexed hereto as Exhibit B, with respect to Trust shares owned by
shareholders for which such broker is the dealer or holder of record or
such Servicing Agent has a servicing relationship.
(b) Payments may be made pursuant to the Plan for any advertising and
promotional expenses relating to selling efforts of the shares of each
series of the Trust, including but not limited to the incremental costs of
printing (excluding typesetting) of prospectuses, statements of additional
information, annual reports and other periodic reports for distribution to
persons who are not shareholders of the Trust; the costs of preparing and
distributing any other supplemental sales literature; expenses of certain
personnel engaged in the distribution of shares; costs of travel, office
expenses (including rent and overhead), equipment, printing, delivery and
mailing costs incurred in the distribution of shares.
(c) The aggregate amount of payments by the Trust in a fiscal year, to
brokers, servicing agents, or the Distributor pursuant to paragraphs (a)
and (b) shall not exceed .25% of the average daily net assets of each
series of the Trust.
(d) The schedule of such fees and the basis upon which such fees will be
paid shall be determined from time to time by the Board of Trustees of the
Trust.
3. Reports. Quarterly, in each year that this Plan remains in effect, the
Trust and the Distributor shall prepare and furnish to the Board of Trustees
of the Trust a written report, complying with the requirements of Rule 12b-1,
setting forth the amounts expended by the Trust under the Plan and purposes
for which such expenditures were made.
4. Approval of Plan. This Plan shall become effective upon approval of the
Plan, the form of Selected Dealer Agreement and the form of Shareholder
Service Agreement, by the majority votes of both (a) the Trust's Board of
Trustees and the Qualified Trustees (as defined in Section 6), cast in person
at a meeting called for the purpose of voting on the Plan and (b) the
outstanding voting securities of each series of the Trust, as defined in
Section 2(a)(42) of the Act.
5. Term. This Plan shall remain in effect for one year from its adoption
date and may be continued thereafter if this Plan and all related agreements
are approved at least annually by a majority vote of the Trustees of the
Trust, including a majority of the Qualified Trustees, cast in person at a
meeting called for the purpose of voting on such Plan and agreements. This
Plan may not be amended in order to increase materially the amount to be
spent for distribution assistance without shareholder approval in accordance
with Section 4 hereof. All material amendments to this Plan must be approved
by a vote of the Board of Trustees of the Trust, and of the Qualified
Trustees (as hereinafter defined), cast in person at a meeting called for the
purpose of voting thereon.
6. Termination. This Plan may be terminated as to any series at any time
by a majority vote of the Trustees who are not interested persons (as defined
in Section 2(a)(19) of the Act) of the Trust and have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
to the Plan (the "Qualified Trustees") or by vote of a majority of the
outstanding voting securities of the Trust, as defined in Section 2(a)(42) of
the Act.
7. Nomination of "Disinterested" Trustees. While this Plan shall be in
effect, the selection and nomination of the "disinterested" trustees of the
Trust shall be committed to the discretion of the Qualified Trustees then in
office.
<PAGE>
8. Miscellaneous.
(a) Any termination or noncontinuance of (i) a selected dealer agreement
between the Distributor and a particular broker or (ii) a shareholder
service agreement between the Distributor or the Trust and a particular
person or organization, shall have no effect on any similar agreements
between brokers or other persons and the Distributor of the Trust pursuant
to this Plan.
(b) Neither the Distributor nor the Trust shall be under any obligation
because of this Plan to execute any selected dealer agreement with any
broker or any shareholder service agreement with any person or
organization.
(c) All agreements with any person or organization relating to the
mplementation of this Plan shall be in writing and any agreement related to
this Plan shall be subject to termination, without penalty, pursuant to the
provisions of Section 6 hereof.
Dated: , 1996
2
<PAGE>
EXHIBIT A
Vista Broker-Dealer Services, Inc.
125 West 55th Street
New York, New York 10019
Re: Selected Dealer Agreement for
Mutual Fund Trust
Gentlemen:
We understand that Mutual Fund Trust (the "Trust") has adopted plans (the
"Plans") pursuant to Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "Act") for making payments to selected brokers for Trust
distribution assistance.
We desire to enter into an Agreement with you for the sale and distribution
of the shares of the Premier Funds of the Trust (the "shares") for which you
are Distributor and whose shares are offered to the public at net asset
value. Upon acceptance of this Agreement by you, we understand that we may
offer and sell the shares, subject, however, to all of the terms and
conditions hereof and to your right to suspend or terminate the sale of such
securities.
1. We understand that the shares covered by this Agreement will be offered
and sold at net asset value without a sales charge. We further understand
that all purchase requests and applications submitted by us are subject to
acceptance or rejection in the Trust's discretion.
2. We certify that we are members of the National Association of Securities
Dealers, Inc. ("NASD") and agree to maintain membership in said Association,
or in the alternative, that we are foreign brokers not eligible for
membership in said Association. In either case, we agree to abide by all the
rules and regulations of the NASD which are binding upon underwriters and
brokers in the distribution of the shares of open-end investment companies,
including without limitation, Section 26 of Article III of the Rules of Fair
Practice, all of which are incorporated herein as if set forth in full. We
further agree to comply with all applicable state and Federal laws and the
rules and regulations of authorized regulatory agencies. We agree that we
will not sell or offer for sale, the shares in any state or jurisdiction
where they are not exempt from or have not been qualified for sale.
3. We will offer and sell the Shares covered by this Agreement only in
accordance with the terms and conditions of its then current Prospectus, and
we will make no representations not included in said Prospectus or in any
authorized supplemental material supplied by you. We will use our best
efforts in the development and promotion of sales of the shares covered by
this Agreement and agree to be responsible for the proper instruction and
training of all sales personnel employed by us, in order that the shares will
be offered in accordance with the terms and conditions of this Agreement and
all applicable laws, rules and regulations. We agree to hold you harmless and
indemnify you in the event that we, or any of our sales representatives,
should violate any law, rule or regulation, or any provisions of this
Agreement, which may result in liability to you; and in the event you
determine to refund any amount paid by any investor by reason of any such
violation on our part, we shall return to you any distribution assistance
payments previously paid or allowed by you to us with respect to the
transaction for which the refund is made. All expenses which we incur in
connection with our activities under this Agreement shall be borne by us.
4. For purposes of this Agreement "Qualified Accounts" shall mean: accounts
of customers of ours who have purchased shares and who use our facilities to
communicate with the Trust or to effect redemptions or additional purchases
of shares and with respect to which we provide shareholder and administration
services, which services may include, without limitation: answering inquiries
regarding the Trust; assistance to customers in changing dividend options,
account designations and addresses; performance of sub-accounting;
establishment and maintenance of shareholder accounts and records; processing
purchase and redemption transactions; automatic investment in Trust shares of
customer account cash balances; providing periodic statements showing a
customer's account balance and the integration of such statements with those
of other transactions and balances in the customer's other accounts serviced
by us; arranging for bank wires; and such other shareholder services as you
reasonably may request, to the extent we are permitted by applicable statute,
rule or regulation.
5. In consideration of the services and facilities described herein, we
shall be entitled to receive from you such fees as are set forth in the Plans
for Payment of Certain Expenses for Distribution or Shareholder Servicing
Assistance. We understand that the payment of such fees has been authorized
pursuant to Plans approved by the Board of Trustees and shareholders of
certain of the Funds comprising the Trust and shall be paid only so long as
this Agreement is in effect.
6. The frequency of payment, the terms of any right to sell in a territory,
and any other supplemental terms, conditions or qualifications for us to
receive such payments are subject to change by you from time to time, upon 30
days' written notice. Any orders placed after the effective date of such
change shall be subject to the fee rates in effect at the time of receipt of
the payment by the Trust or you. Such 30-day period may be waived at your
sole option in the event such change increases the distribution assistance
payments due us.
7. Payment for shares shall be made to the Trust and shall be received by
the Trust promptly after the acceptance of our order. If such payment is not
received by the Trust, we understand that the Trust reserves the right
without notice, forthwith to cancel the sale,
<PAGE>
or, at the Trust's option, to sell the shares ordered by us back to the Trust
in which latter case we may be held responsible for any loss, including loss
of profit, suffered by the Trust resulting from our failure to make payments
aforesaid.
8. Your obligations to us under this Agreement are subject to all the
provisions of any underwriting agreements you have or may enter into with the
Trust provided copies thereof have been provided to us. We understand and
agree that in performing our services covered by this Agreement we are acting
as principal, and you are in no way responsible for the manner of our
performance or for any of our acts or omissions in connection therewith.
Nothing in this Agreement or in the Plans shall be construed to constitute us
or any of our agents, employees or representatives as your agent, partner or
employee, or the agent, partner or employee of the Trust.
9. This Agreement shall terminate automatically (i) in the event of its
assignment, the term "assignment" for this purpose having the meaning defined
in Section 2(a)(4) of the Act or (ii) in the event the Plans are terminated.
10. This Agreement may be terminated at any time (without payment of any
penalty) by a majority of the "Qualified Trustees" as defined in the Plans or
by a vote of a majority of the outstanding voting securities of the Trust as
defined in the Plans (on not more than 60 days' written notice to us at our
principal place of business). We, on 60 days' written notice addressed to you
at your principal place of business, may terminate this Agreement. You may
also terminate this Agreement for cause on violation by us of any of the
provisions of this Agreement, said termination to become effective on the
date of mailing notice to us of such termination. Without limiting the
generality of the foregoing, any provision hereof to the contrary
notwithstanding, our expulsion from the NASD will automatically terminate
this Agreement without notice; our suspension from the NASD or violation of
applicable state or Federal laws or rules and regulations of authorized
regulatory agencies will terminate this Agreement effective upon date of
mailing notice to us of such termination. Your failure to terminate for any
cause shall not constitute a waiver of your right to terminate at a later
date for any such cause.
11. All communications to you shall be sent to you at your offices at 156
West 56th Street, New York, New York 10019. Any notice to us shall be duly
given if mailed or telegraphed to us at the address shown on this Agreement.
12. This Agreement shall become effective as of the date when it is executed
and dated by you below. This Agreement and all the rights and obligations of
the parties hereunder shall be governed by and construed under the laws of
the State of New York.
--------------------------------------
(Broker/Dealer)
By
--------------------------------------
Name:
Title:
--------------------------------------
(Address)
--------------------------------------
(City) (State) (Zip Code)
Accepted:
VISTA BROKER-DEALER SERVICES, INC.
Distributor
By:
--------------------------------
Name:
Title:
Dated:
A-2
<PAGE>
EXHIBIT B
Mutual Fund Trust
125 West 55th Street
New York, New York 10019
Re: Shareholder Service Agreement for
Mutual Fund Trust
Gentlemen:
We understand that Mutual Fund Trust (the "Trust") has adopted plans (the
"Plans"), on behalf of the existing series (the "Funds") of the Trust,
pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended (the
"Act"), for making payments to certain persons for distribution assistance
and shareholder servicing.
We desire to enter into an Agreement with the Trust for the servicing of
shareholders of, and the administration of shareholder accounts in, certain
Funds comprising the Trust. Subject to the Trust's acceptance of this
Agreement, the terms and conditions of this Agreement, shall be as follows:
1. We shall provide shareholder and administration services for certain
shareholders of the Funds who purchase shares of the Funds as a result of
their relationship to us, as further designated in Exhibit A hereto
("Qualified Accounts"). Such services may include, without limitation, some
or all of the following: answering inquiries regarding the Funds; assistance
in changing dividend options, account designations and addresses; performance
of sub-accounting; establishment and maintenance of shareholder accounts and
records; assistance in processing purchase and redemption transactions;
providing periodic statements showing a shareholder's account balance and the
integration of such statements with those of other transactions and balances
in the shareholder's other accounts serviced by us, if any; and such other
information and services as the Trust reasonably may request, to the extent
we are permitted by applicable statute, rule or regulation to provide such
information or services.
2. If Fund shares are to be purchased or held by us on behalf of our clients:
(i) Such shares will be registered in our name or in the name of our
nominee. The client will be the beneficial owner of the shares of each Fund
purchased and held by us in accordance with the client's instructions and
the client may exercise all rights of a shareholder of a Fund. We agree to
transmit to the Trust's transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each client
all proxy statements, periodic shareholder reports and other communications
received from the Trust by us on behalf of our clients.
(ii) We agree to transfer to the Trust's transfer agent, on the date
such purchase orders are effective, federal funds in an amount equal to the
amount of all purchase orders placed by us on behalf of our clients and
accepted by the Trust (net of any redemption orders placed by us on behalf
of our clients). In the event that the Trust fails to receive such federal
funds on such date (other than through the fault of the Trust or its
transfer agent), we shall indemnify the Trust against any expense
(including overdraft charges) incurred by the Trust as a result of its
failure to receive such federal funds.
(iii) We agree to make available to the Trust, upon the Trust's request,
such information relating to our clients who are beneficial owners of Fund
shares and their transactions in Fund shares as may be required by applicable
laws and regulations or as may be reasonably requested by the Trust.
(iv) We agree to transfer record ownership of a client's shares of a Fund
to the client promptly upon the request of the client. In addition, record
ownership will be promptly transferred to the client in the event that the
person or entity ceases to be our client.
3. We shall provide to the Trust copies of the lists of members of our
organization, if any, and make available to the Trust any publications and
other facilities of our organization for the placement of advertisements or
promotional materials and sending information regarding the Funds, to enable
the Trust to solicit for sale and to sell shares to such members.
4. We shall provide such facilities and personnel (which may be all or
any part of the facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to shareholders maintaining Qualified Accounts with
the Trust, and to assist the Trust in servicing accounts of such
shareholders.
5. Neither we nor any of our employees or agents are authorized to make
any representation concerning Fund shares except those contained in the then
current Prospectus for the applicable Fund, copies of which will be supplied
by the Trust to us; and we shall have no authority to act as agent for the
Trust.
6. In consideration of the services and facilities described herein, we
shall be entitled to receive from each Fund such fees as are set forth in
Exhibit A hereto. We understand that the payment of such fees has been
authorized pursuant to the Plans approved by the Trustees and shareholders of
the Trust and shall be paid only so long as the Plans and this Agreement are
in effect.
7. The Trust reserves the right, at the Trust's discretion and without
notice, to suspend the sale of shares or withdraw the sale of shares of each
Fund.
8. This Agreement shall terminate automatically (i) in the event of its
assignment, the term "assignment" for this purpose having the meaning defined
in Section 2(a)(4) of the Act or (ii) in the event that the Plans terminate.
<PAGE>
9. This Agreement may be terminated at any time (without payment of any
penalty) by a majority of the "Qualified Trustees" as defined in the Plans or
by a vote of a majority of the outstanding voting securities of each Fund as
defined in the Plans (on not more than 60 days' written notice to us at our
principal place of business). We, on 60 days' written notice addressed to the
Trust at its principal place of business, may terminate this Agreement. The
Trust may also terminate this Agreement for cause on violation by us of any
of the provisions of this Agreement or in the event that the Plans shall
terminate, said termination to become effective on the date of mailing notice
to us of such termination. The Trust's failure to terminate for any cause
shall not constitute a waiver of its right to terminate at a later date for
any such cause.
10. All communications to the Trust shall be sent to the Trust at the
address set forth above. Any notice to us shall be duly given if mailed or
telegraphed to us at the address set forth below.
11. This Agreement shall become effective as of the date when it is
executed and dated by the Trust below. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York.
--------------------------------------
(Firm Name)
--------------------------------------
(Address)
--------------------------------------
(Firm Name)
--------------------------------------
(City) (State) (Zip Code)
By
--------------------------------------
Name:
Title:
Accepted:
MUTAL FUND TRUST
By:
----------------------------------
Name:
Title:
Dated:
B-2
<PAGE>
MFT 020796
